Necessary? No. But it could be an easy way for communities to self-ID on related communities. If not, WTF is the point of it in the first place?

It is not needed for nostr side auth, but in my use case a full nip-05 w/ domain does not work with legacy apps that I PMP an to integrate, think 2000 lan multiplayer games that have a 16-32 char limit. So for me to auth, I plan to use my local nip-05, without the domain, just the id, to tie a user to the npub.

Yeah ID between communities or between individuals is a key usecase.