The setup special variable is not actually global in scope, the engine makes it available to known things like macros and passage content so it just appears like it is. The Javascript contained within your span element's onmouseover event property is being executed in a different scope so you receive the error that you did.
I don't know the correct way to make the setup special variable available in the scope you want to access it in, although you could create your own unique Namespace and define your customer Javascript functions on that instead. Place code like the following within your story's Story Javascript area.
if (!window.GE) {
window.GE = {};
}
GE.testFunction = function() {
console.log('testFunction called');
};
... the use code like the following in a Passage to reference the custom function.
<span id="eq1" onmouseover="GE.testFunction()">Mouseover Me!</span>
note: You should rename the GE namespace you something that makes sense to your story, just remember to update both the Javascript and the Passage contents with the new name.