Are Expensive Balanced Interconnects Necessary?

Yes all your components from dac to preamp,to Poweramp needs to be balanced 

Differentially from Input to output ,then it truly lowered noise floor !!

Why XLR cables in my system ( REGA ISIS VALVE cdp/DAC & its stablemate REGA OSIRIS integrated amp)

Q. Why use XLR’s instead of unbalanced RCAs in some circumstances?

A, Because it is specifically designed to work best in its OEM design and reinforced as such in the OEM user manual 

For example: from  the REGA ISIS VALVE manual

”… The Valve Isis is best used in a fully balanced system using balanced XLR connectors and leads. (Rega balanced XLR leads available from your Rega dealer). The connections are as follows (please note - pin 2 & 3 are floating).
Pin 1 = Earth Pin 2 = Positive Pin 3 = Negative …”

From the OSIRIS manual

• input 1 = balanced input via XLR

The most common theory – which works well for me, because it coincides well with what I usually hear – is that single-ended connection (and gear) produces a natural spectrum of musical harmonics, same as in real life, while balanced gear (and connection) greatly reduces even (pleasant for our hearing harmonics), but leaves the odd (subjectively unpleasant, un-musical) harmonics virtually unmodified, unchanged, and thus DISTORTS the natural spectrum of harmonics, i.e. the ratio between odd and even harmonics, compare to life music.

@styleman ^that^ theory is total new to me.
The only thing I have ever heard referenced to balanced configuration, is the CMRR advantage of noise being rejected.

Never anything about harmonics. How would the cable even know what to add?
It is solely about minimising noise.

Never necessary, SOMETIMES an improvement.

Only you can determine what’s "worth" it.

XLR, TRS not much difference.

This is the perfect example of a discussion that offers nothing but more confusion about what a music lover should do about using balanced vs unbalanced cables. Life is too short to dive that deeply into these issues. I use balanced, and I don't take the time to look back. Honestly, my ears and mood can have such variance in how it absorbs sound on a particular moment that those minuscule differences often differ as to what really sounds best, specially based on the recording you listen to.