I haven't heard of such a thing, which suggests a simple answer: an oral tenure defense is not necessary. But regardless of whether it's necessary in some abstract sense, it might be a requirement wherever you end up.
It's possible that your tenure defense would be a grueling affair, with the audience trying to poke holes in your research or dispute its significance, but I very much doubt it. At worst you could expect the same treatment as an outside candidate giving an interview talk.
The tenure defense is presumably intended to give you a chance to explain your research program, specifically what you have done and why it matters. This is in principle redundant (your tenure file should already do this), but adding an oral presentation could help. It's often inspiring to see someone present their own work, and it can be valuable to have a chance to ask questions. In cases where tenure seems likely, the presentation could also play the role of an inaugural lecture, highlighting for the department the work of someone who is about to become a permanent colleague.
This practice seems uncommon enough that I doubt there's a clear standard for exactly what it means. Anyone considering taking a tenure-track job with a tenure defense presentation at the end should ask how it works at that particular institution.
I imagine their publication/teaching/grant record should pretty much speak for itself to a tenure committee.
Publication records can speak surprisingly unclearly. A non-expert reading through someone's papers won't necessarily appreciate their novelty or how they contribute to the big picture, and may not even understand clearly how they fit together into a coherent research program. Keep in mind that most people evaluating a tenure case will be non-experts: even other department members will typically have different specialties, and that's not counting university-wide committees or administrators.
One crucial part of preparing a compelling tenure case is sorting out these issues and framing everything appropriately. This is done partly by the candidate, partly by whoever is overseeing the case (typically the department head), and partly by the letter writers.
So from this perspective, something more than just a binder full of papers is definitely necessary. However, the added context is typically supplied through written documents; if there is an oral presentation, then it is just to supplement the written file.