No, holster lining is not a “must” have, in the sense that we’ll make you one without lining if you prefer. It’s not so much a question of what the lining does for the gun as it is what it does for the holster.
We use either smooth tooling leather (same as on the outside) or a “split” leather, which is less smooth but not “nappy” – it’s vegetable tanned and very nicely cut. We don’t use “nappy” suede that can collect dust and particles (which WOULD affect the gun).
And the ‘why’ of lining is much like a braided rope is stronger than a single fiber rope of the SAME THICKNESS. The layers pull against each other to make the whole assembly much firmer, for longer.
If you’ve ever seen a single layer leather holster used in high humidity areas, you know how a sweat shield can get “dog-eared” and floppy. The laminated layers vastly reduce that, since the outer layer would have to actually stretch to let the inside layer sag (and vice versa).
With most holster models, we recommend lining the body side panel, and then on the outside (away) panel EITHER go with a lining OR a “reinforcement” panel, but not both. And of course all of our exotic leather holsters are “lined” to give the holster shape and firmness.