TouchWiz What does it DO? What does TouchWiz actually DO?  In plain English.  And if it's really necessary to have, why is it made an option?
TouchWiz is not just a launcher. As advertised time and again in various places, its full name is "TouchWiz UX", with UX standing for User eXperience.

Early on when TouchWiz was in its infancy (TouchWiz 3/4), it was indeed not much more than a launcher: functions added by Samsung are few and not tightly integrated with the OS, and the launcher itself was easily ported.

Then things changed drastically when Samsung introduced TouchWiz 5 (dubbed "Nature UX") on their Galaxy S III, massively overhauling the interface (again, not just the launcher - lockscreen, notification drawer, status bar layout, icons, etc.), plus integrating key functions such as S Voice and Smart Stay.

As Samsung pushed flagship phones by generation, they introduced more and more functions, most if not all of which are tightly integrated into the framework, to the extent that there are no longer ports to other devices (except ones that port the whole ROM over).

TL;DR: TouchWiz is your device's user interface and experience. It controls the way you see and interact with the device.

As for its necessity, you could easily replace the launcher since Samsung did give you an option for that, but the rest of the UX (yet again, not just the launcher) is locked in, to act as a differentiating factor for their devices on the market, and to keep customers inside their ecosystem (e.g. using their apps brings them revenue). Unless you decide to dive in the world of custom ROMs (voids warranty), it's not an option per se.

Reference: Wikipedia