1: relays are part of NIP01
2: relays are the point of Nostr
3: Nostr is a word not an acronym, the fact that 'notes and other stuff transmitted by relays' spells n.o.s.t.r. is mere chance
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It actually spells naostbr.
Also yes, relays are needed. It's a protocol that facilitates the dissemination and discovery of digitally signed (and OTS-dated?!) content.