Does Rails need database-level constraints?

Database constraints aren't required any more than wearing seat-belts are required in your car. You can drive around all you like and everything will work great until a problem arrives. The seat-belt (constraints) keep you (the data) safe.

So it's highly recommended that you create constraints to enforce data-integrity at the database level, because it's highly likely that 1) You will interact with the database at some point outside of Rails and 2) You will make a mistake in your code that causes invalid data.

Database constraints can be more work, but it saves a lot of work, especially when your code can make assumptions about the data and doesn't have to do tons of validity checks.

The reason ActiveRecord doesn't support foreign keys out of the box is because it is meant to be database-agnostic, and foreign keys are not universally supported by all database systems.

You can add foreign-key support with the Foreigner plugin.

Not all of the supported databases for ActiveRecord support foreign keys, so the Rails framework doesn't include it as a core feature.

Note: the above is no longer accurate, as Rails added FK support in 4.2.