Skipping the formatting of /data when installing onto a Galaxy S5?

Yes, because theoretically it is not necessary to format the /data partition.

But knowing from practical experience …

And - what if a “Factory data reset” has to be done at some point?

A Factory data reset erase flash memory data, delete internal memory (document, video, image file, etc.)

Saving important data of any kind protects against user frustration. A backup with a few ADB commands takes only little time.