Not essential, not at all.  But they're pretty useful.  I know how fast I hike, so my watch can give me a pretty good idea of where I am between landmarks.  If you know how to line it up with the sun, it's a quick easy compass I can use without having to dig out my real one.  (This doesn't work with a digital!)  Plus, I'm just used to having it.

Retired medical technologist and engineer
REI member since 1978
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