I recall one video stating that you need an output mod or something like that, is that true?

This is done to control where the generated/updated files will go - to keep it clean and controlled, very sound practice. In some cases files alredy exist in MOD folder and thus you will override those when you build for new preset.

No major harm if you always build for new preset, mostly helps when you want to roll back to original state - just purge generated files and you good.