The User-Startup is just that. It's were you can setup your own Assigns, additions to paths etc.
If this file doesn't exist your Amiga will still load up and run. A check is made for it before it is called. And yes the normal place for this to be called from is just before the LoadWB in the Startup-Sequence file.
Some software that you install will need assigns or paths setting up to run properly, i.e. DPAINTIV: etc. Without these assigns the program won't run. What should happen is that when you install software any assigns that it needs are normally added to the User-Startup.
If you have an error in these files - depending on what the error is - you will get a message shown on the screen at startup.
I hope this is making sense :-?
Dave G 8-)