Is consolidating really necessary?

Consolidating is not necessary. As muguy states, all it does is put everything into the same parent folder. But if you're happy with the layout the way it is, then leave it alone. Like you, I too have my Amazon purchases (along with other online stores) in a separate folder, mainly because the old Amazon downloader set it up that way. Consolidation helps those people who want everything in one place. I do not use consolidate; I know where my stuff is!

However,

ChampionOfIthaca wrote:

But it seems like that creates a copy of all of the music files. I've got about 38 Gig of music. I've got enough space to create this copy, but it seems like a waste of resources and time.

Maintaining a copy of all your music is not a waste of time or space.

Hard drives (and SSDs) fail - it's a fact of life. So the best advice (to everyone) is that you make and maintain a copy of all the music you own, on an external drive. Then if (when) your computer's hard drive fails, you have a backup from which you can re-create your Library.

An external drive for 38GB of files cannot possibly cost too much. I've just looked online at Amazon UK and found two 64GB memory keys (memory stick, USB drive, whatever you want to call them) for £8 and £13 That's about US$11 and $17.

The UK price includes sales tax (at 20% I might add).

Consolidating simply moves all of your music into the same folder, like you have.