Please let me know what is the exact purpose of this entry and what would be the impact of removing it on other tools/processes like pgbouncer, pem, replication etc ?
While that may be a true statement for installation from source I'm pretty certain most packagers have a more tightly controlled setup that doesn't involve "trust" authentication.
The reason behind choosing to include that specific line is to minimize the amount of post-install effort needed for one to connect to the server from the local machine, which is often a personal machine with only the "DBA" having access to it.
The better and more widely implemented default is requiring a password for host while accepting peer for local.
All external tools should be told what credentials to use to connect to the server and those credentials added to the system and a more restrictive pg_hba.conf entry added to permit those connections. All trust connections in pg_hba.conf should be removed from it as quickly as possible.