Boot loader unlocking is not required to install recovery & ROM. Boot load unlocking allows playing with your ROM (system files) and the space it occupied in your internal flash memory of the phone ... You could shrink the ROM and get more space in your internal memory! that you could install more apps. But it's a fail and not widely used, because now power users mostly share their external memory with their internal to get more space internally ...
S-OFF is an HTC specific thingy. No such crap on Nexus devices.
First of all, S-OFF stands for "Security OFF" and S-ON for "Security ON". It's a term specific to HTC devices (and refers to digital signature checking on the bootloader "hboot"). Retail devices always come with SHIP S-ON locked bootloaders.
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