You format when you want, it will wipe all your data. It's usually suggested when going from stock to another ROM, but not required stock to stock most of the time.
Sent from my XT1032 using xda app-developers app
Moto G 16GB
Huawei Y300 (Black)
Alcatel OT-983 (Black) [Dead]
Xperia Play R800i (Black) [Dead]
Nexus 7 (16GB) [Returned]