When you run with a very low load, and with a lot of bypass, your chiller gets a low return temp and will cut the compressor out and in to prevent freezing the evaporator, which makes the temp cycle. This is also an issue when the chiller is oversized.
This might or not matter depending on your application. If you have one relatively small 24hr critical load then the cycling of temp might be detrimental to control. If you have a few zones of comfort cooling on night setback then no one may care.
The buffer tank adds capacity to the hydronic loop which stores and releases energy, evens out the temp variation and reduces the cycling on the compressor.