@bimbimboy I think it's needed because kwallet does no longer get the password from the login via a PAM module, so it has no way to unlock the wallet that's encrypted with your password anymore.
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If you remove you kwallet password, it should stop asking you for a password, it's the only solution I've found to this problem. But that also means you're removing the password of you kwallet.
When you choose this option in the settings, a tooltip pops up, explaining that you need to create an empty password for your Kwallet to prevent typing it in each time.
I would only recommend this if your OS is encrypted.