No, it's just a option available to geek on, if you wish. Some users are all about the waterfall. You can customize the colors, the frequency range, the bandwidth and other features.
You don't "need" the waterfall option to monitor your systems of choice. It can be an interesting tool to see additional frequencies in use around the ones you are interested in, and in some cases, it may may finding the source of interference. But you do not "need" it to monitor your systems.
After you get used to your SDS200, you may want to get the waterfall display. Helps identify a close signal bleeding over what you’re listening to. Just wish UNIDEN would do a split screen with frequency on top and waterfall on the bottom while scanning.
The Waterfall is essentially a band scope that lets you set limits above and a below a frequency you select to see how active that range of frequencies are. It's an Option available on the SDS line, that's available from Uniden for $50 I think. I have it, but I rarely use it.