It's a file where you can put your own handlers for hiding the HUD or switching the death state which will trigger interface changes in the dynamic bar. Even more features may be implemented where the user is prompted to use this file.
Is this mandatory?
No, not at all. This file just makes everything "pretty" and adds the death state management to the dynamic bar. This is the user's responsibility to check for events and configure the same way it's provided. We do not provide support for customizing the handlers.lua file as it is merely for cosmetics and the events can change depending on the inventory resource or the hospital resource you use.