Optocoupler isolation necessary?
simulate this circuit &ndash; Schematic created using CircuitLab

Figures 1 and 2 redrawn for clarity. (GND symbols point to ground.)


  I'm aware that option B is a lot more safer should there be a fault, but that doesn't mean that option A doesn't function correctly, right? 


Option A is dangerous before a fault. The circuit ground is live every second half-cycle. That means the controller is live and the whole circuit must be insulated to protect against contact.


  I've come to the conclusion that it is just a safety precaution in the event of an accident, such as a live wire touching the controller, albeit not something that is required assuming that everything goes according to plan.


Incorrect. Very incorrect. In the top-right schematic I've removed two of the diodes to show current flow on the negative mains half-cycle. The cathode of D8 will be 0.7 V below ground (because N is earthed back at the electricity company's transformer) and the circuit ground will be 0.7 V above the L wire voltage due to D5. So on a 230 V AC supply the peak voltage on your circuit ground will be -230&#x221A;2 V.



Tips on schematic drawings:


Draw your ground symbols pointing to the ground.
Draw your voltage sources with positive on top.
Draw current flow top to bottom.