I don't think it is critical to keep /home separate but if you need to reinstall it is really nice. You can reset the OS without touching your data or user-level configs. Either for the same distro because you fiddled around and broke it or another one for distro-hopping. It also makes encrypting it easy, although full-disk encryption is getting so easy that it probably isn't an issue. Good backups also mitigate this, although the recovery will be slower than just reinstalling while leaving your existing home there.

To be honest I don't actually keep home separate anymore. But that is mostly because I trust NixOS enough that I know I will never need to reinstall. I can always roll back or worst case install over top of the existing install from a live USB.

Overall I would say that the cost of doing so is fairly small as well. Unless you are running a lot of system services data outside of /home is usually fairly limited. Although I agree that getting the partition sizes wrong can be frustrating.