My brief time using it, it’s how you set up profiles (for sharing a controller or using specific layouts for different games), it’s how you tell the controller what buttons the back paddles map to, and it’s how you update the firmware.
It’s not really necessary, in my experience, unless you want to use the back paddles. Steam Input just sees the controller as a standard xinput device, so the back paddles are otherwise ignored.
When I tried it a year or two ago, no. But the Deck wasn’t as popular, so who knows now?
I’ve also read that you can maybe update the firmware with
fwupd
over a wired connection, but I haven’t been able to verify.