The reasons that you might use this estimator in these cases are, first, estimating the equations jointly, even if uncorrelated, will be faster and, second, with this estimator, you can impose cross equation restrictions. The setup for the functions is exactly that shown in Section 19.3.2. All of the elements, functions, etc., shown there apply fully to these equation definitions. Note, as well that the parameters defined by the labels may appear anywhere in any equation, without restriction. That is, there is no presumption that any particular parameter applies to or belongs in any specific equation.
Every equation is assumed to involve any or all of the parameters.
The command shown above specifies a set of Lhs variables. You may, instead, use the functions to define the residuals' directly, and omit the Lhs definition. This will be useful in specifying the GMM estimator, in which the orthogonality conditions may involve functions more complicated than a simple residual. Lhs specification in your command. Let i' index the sample observations where needed.