How important is setting the language on posts and comments?

It's not crazy important, it'll just default to "Unspecified".

This helps clients filter posts in languages you can read and those that you don't, but currently most communities are english only anyway so there's little difference.

Makes sense in something like say, !montreal@lemmy.ca where it's got both french and english content. French people can discard the english content and english people can discard the french content and those that understands both sees both.

If you set the language(s), it will show only posts with tha language (is set) on your feed, otherwise shows all languages.
https://join-lemmy.org/docs/users/06-other-features.html#language-tags

Most posts don't have a language defined (undefined), don't know if they'll also show on your feed.