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mke2fs stands for MaKeExt2FS so it clearly puts a new file system on the device. It is how you format things under linux.
mke2fs -n /dev/loop0
mke2fs 1.39 (29-May-2006)
Filesystem label=
OS type: Linux
Block size=1024 (log=0)
Fragment size=1024 (log=0)
38456 inodes, 153600 blocks
The block size is 1024bytes=1K so /dev/loop0 (pointing to what losetup did) will be 153600Kbytes.
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