Yes, that is my understanding and I think the lower the inertia, the better. So all else being equal, I would prefer adding more weight to the counterweight and sliding it as close to the pivot as possible. Most people don't consider or think about this because their tonearms don't allow the addition of extra or bigger weights. The SME V-12 does, and it improves performance.
So, no, it is not critical, but in my opinion, if it is an available adjustment on a given tonearm, then it should be considered to improve performance.
So, no, it is not critical, but in my opinion, if it is an available adjustment on a given tonearm, then it should be considered to improve performance.