The small return line allows a small amount of fuel to return to the tank to keep the fuel circulating and help prevent vapor lock. It is needed most during hot weather, with the A/C running and with the car at idle or low speeds.
Pumps designed to use the return line also have a stiffer spring above the diaphragm than pumps designed for use without the return line. This is done to compensate for the pressure drop caused by the fuel returning to the tank.
You do not absolutely have to run a return line. However, keep in mind that you are more likely to have vapor lock in hot weather. Also, you may need a fuel pump designed to run without a return line (ask for one for a car without A/C) because if you simply plug the return port on the pump, the pressure may be too high and flood the carb (especially a Q-jet; Holley carbs can usually handle the increase in pressure).
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