My word.
My only hope is that those who have said this is not a significant factor don't fly aeroplanes!
Seriously, with modern kit, most instrument errors are barely worse than of academic interest. However, cold weather ops, without the relevant correction, will put you into terrain.
The cause? Rate of change of pressure versus altitude depends on density. Every foot you climb you've got 1 less foot of the column of air above you, so the mass of that column of air decreases. Less mass above you = less weight pushing down per unit area = less pressure
If the air is denser than usual, that 1 foot of climb translates to a greater amount of mass than usual, so the pressure decrease is larger than usual. Thus, as far as the altimeter is concerned, we appear to have climbed further than usual.
So, lets run some numbers.
Lets say you are doing a ski charter into somewhere arse freezingly cold. I've sat on the ramp, close to sea level, at -45C. So ISA -60.
Lets say you are flying inbound to cross a ridge with an elevation of 4,000'
You are flying at 5,000'.
1,000 feet. Pretty safe, yes? A decent margin to deal with any trivial little altimeter errors.
4' per degree of ISA deviation per 1,000'.
4 x 60 x 5 = 1,200 feet.
You are 200' below the ridge rather than 1,000 above it.
Still think its trivial?