Damping fluid is intended to absorb ambient, non-music signal energy (vibrational energy, in the form of resonance frequencies).
Any non-signal vibration whatsoever can degrade the quality of musical playback. Theory states that silicone's unique properties absorb spurious vibrations, dissipating that energy as heat while letting the music signal pass unperturbed.
SME is one of the very fine tonearm makers; their research dictated the use of silicone as a damping treatment at the 'front end' of the signal path. SME are both deliberate and diligent in their design. They don't offer damping so they can charge more for their arms; it's there with good reason. I would respectfully suggest trying it, and giving it some significant listening time. If you hear no difference, you can easily operate without it, with the knowledge that you tried that path.
This damping option is one way to address the equipment-room interface. In my experience, listeners largely discount the role --let alone importance-- that room treatment plays in a high quality listening experience. My room treatment has cost more than 10% of all my electronics, and has offered the greatest degree of improvement in listening quality, second only to hiring Jim Smith to voice my system.
Hope this is clear and of help. Please contact with more questions if you would like. I am available at Havenhearth at live dot com