Do I need UART hardware flow control (RTS/CTS) with Lyra, and what is your recommendation?

No, it is optional. However, Laird strongly recommends that developers make use of UART hardware flow control by implementing and connecting both RTS (Request to Send) and CTS (Clear to Send) lines in their Lyra designs – beside the regular RX (Receive) and TX (Transmit) pins.

Hardware flow control (also known as RTS/CTS flow control) is called so because the control is handled by the hardware. It is useful in scenarios where the transmitter is able to send data faster than the receiver is able to process. The RTS and CTS lines are turned off and on from alternate ends to control data flow, for instance when a buffer is almost full. This design approach is an effective way to prevent data loss and helps to guarantee data integrity in your application.