It's possible in Sanctuary to see some use a crafting bench or a cooking station, is that just cosmetic or does it upgrade their inventory or happiness???

Is it possible to get settlers to play with basketballs or poll cues when there's also basketball net and pool table?

Purely cosmetic.

I not sure but I would think it's like Strong typing at the computer, just for cosmetic looks.

It's "cosmetic" so that it seems they are doing something.