I can see how the confusion arises, if you come from a background of using languages like python or ruby that would support naked function calls that is just what you would expect.  

actually it is possible (with some limitations) to call functions from outide of setup/draw.
This is only possible for functions that have a return value (and are assigned to a varable). and functions, that dont use any processing-stuff (maybe just graphic stuff, did not test it).

since every processing sketch has an "hidden" constructor, these (limited) functions are really called there, when "constructing" your PApplet instance, which is the same, as if you define your own classes, and make assignments to variables outside the constructor.

1.  // call functions outside from setup() or draw()
2. int sum = addNumbers( 1, 2, 3, 4, 5, 6, 7, 8, 9, 10);
3. boolean rval = printSomething("sum = "+sum);
4. boolean printSomething(String str2print){
5.   println(str2print);
6.   return true;
7. }
8. int addNumbers(int ... a){
9.   int rval = 0;
10.   for( int val : a)
11.     rval += val;
12.   return rval;
13. }
14. void setup(){
15. }
16. void draw(){
17. } 

As said.
Additional info: when you write just a few lines of code, without any function, Processing's pre-processor actually just wrap them in a generated setup() function. Of course, it does that only if it doesn't find setup() or draw(). So, if you define a function in addition to your code, Processing will attempt to wrap it in setup() too. Except that Java doesn't allow to nest functions, so you get a syntax error...