Engine undertray felt needed?
 

After discovering my engine seems to be losing a fair amount of oil (only 2 litres left in it), I decided to do an oil change and have a clean up underneath to help spot any leaks (if it is a leak and not burning it). I removed the undertray to do the oil change and decided to clean it up. The felt liner was very soggy, so I suspect a fair amount of oil was in that, though a fair amount of water too going by the mayonnaise. However when I removed the felt liner it pretty much disintegrated, so no real chance of cleaning it up. So I just cleaned the undertray in the end. So is OK to fit the undertray with no felt liner?

No, it's not needed. As you say it's just a trap for oil and moisture.

As like all cars the undertray is their to keep it somewat cleaner underneath ( provided no leaks) and on the STi there is some aero benefits at higher speeds etc, hence the later versions have the side under-body and rear plastics aswell.

Ive ran both on and off for periods of time, and have put mine back on as I find it keeps the underneath ALOT cleaner,