How to reproduce:
1. Open QA provided stripped project "SpriteCreateBounds.zip"
2. Enter play mode
-- Notice one sprite is at the centre of camera viewport, and another one is perfectly following the mouse
3. Exit play mode and open "ColourPlacementCircle.cs"
4. Comment out line 41 (Sprite.Instantiate) and uncomment line 42 (Sprite.Create)
5. Enter play mode again
-- Notice that both sprites are offset to bottom left and not visible on the screen

Sprite.Instantiate() Bounds: Center
Sprite.Create() Bounds: -496, -496

Reproduced on: 2017.1.3f1, 2017.2.1p2, 2017.3.0p2, 2018.1.0b3, 2018.2.0a1

By design - Updated docs to reflect actual behaviour.
The correct pivot value that is passed into Sprite.Create should be normalized to (0,0) -> (1,1) where (0,0) is bottom left, (1,1) is top right (center will be (0.5, 0.5))