“How important is the Earth in a circuit?”
Earthing is just as important as the Positive cabling in completing a DC circuit. If you have inadequate earthing the circuit will suffer a larger voltage drop, in turn increasing strain on charging system components.
“My vehicle has a smart alternator and I have been told not to earth to the start battery”
Yes that is correct.. (Sort of). Some vehicles that have a Variable voltage alternator are fitted with a shunt on the negative terminal to monitor charging and consumption. Often found on EU designed vehicles for emission control/ Fuel economy guidelines.
If your vehicle is fitted with this shunt (See picture Fig.1) the best place to Earth your Dual Battery System will be the first point of contact with the body of the vehicle (see picture Fig.2) otherwise you can cause issues with the vehicles computer and start battery.