not really necessary unless u live somewhere where it floods a lot, or if u drive in like 2 ft. of water often. it's just a safety precaution, in case yur car does go down in deep water, so yur intake doesn't suck water into yur motor. it's supposed be put at the top of the induction tube, at the actual intake. anyone, feel free to correct me if i'm wrong...
its only really needed if you plan on driving through lakes. you wont need it for your average rain or wet roads...so unless you live somewhere where it floods a lot, or you like driving through lakes...dont worry about it.
I live in Phoenix, AZ where the avg rainfall is like 12 inches a year but I still put the bypass on mine. When it rains here it has a tendancy to flood also...I was told to put mine at least 12" from the throttle body. Now when it rains I have no worries when I hit puddles.
I put mine on just in case and it only took 10 min to install