Here is a thread that discusses the basics. The following link, and its reply, have the essentials:
If that's not enough, post again and I can provide a more full explanation. Basically, the S0 and S2 pairings use different key exchange mechanisms, which is why S2, the more recent protocol, only takes 1/3 the packets to do the key exchange. Both are secure. S2 authenticated uses a different key for each device rather than one key for the network. S0, with 3x the traffic, is more congestion on your mesh and a bigger power drain on battery-powered devices.
Unsecure pairing might allow someone to sniff your traffic and possibly inject packets to operate a device. Not good if you are controlling a lock, sending unlock/lock key codes, etc.
People differ in what they want. I only want/need secure pairing on access control devices like locks, external doors/windows, alarm system components; other things, I don't care and can have them with no security. YMMV.
The bigger concern, in my opinion, is that you should get Z-Wave Plus devices rather than non-Plus because of the better route-improving decisions that Plus devices automatically and continuously make during normal operation.
