The tea towel is not a primary necessity. You can live without it. But sometimes it is very useful. It is convenient to use a teapot at the ceremony if you need to wet your hands or sweep the tea drops off the table. Aesthetics is a determining factor in Chinese tea drinking. Poured tea on the table is not very cool idea.
Of course, you can also use a standard towel from the supermarket. Easier and cheaper. But you agree with the pleasure of using a specially designed thing at the tea ceremony?!