Before you dive deeper into questions like “How important is TVL?” you need to check the existing state of TVL

A better TVL is an obvious indicator of effective usability for investors and traders.

The growth in TVL for a particular DeFi protocol brings about plausible improvements in usability, liquidity, and popularity for the platform.

TVL only provides a glimpse of the total value of assets that are locked in a platform, it doesn’t highlight activity levels.for example

If a platform has a high TVL but low user-activity levels, this may mean that a small number of investors account for the TVL on that platform.

Generally, this is a red flag and would require more investigation.

The DeFi industry isn’t immune to the collapse of trusted institutions, as was evident with the $60 billion collapse of the Terra (LUNA) lending protocol in 2022. This highlighted another problem with TVL: The assets involved in the calculation may not be as secure as believed.

The Bottom line according to an article on Investopedia, "Total value locked (TVL) serves as a crucial indicator in the cryptocurrency industry, helping investors assess the security and popularity of decentralized finance (DeFi) platforms. A platform with a high TVL suggests strong investor trust, similar to deposits in traditional banking. However, TVL should be used alongside other metrics, as it does not directly account for user activity and can sometimes be artificially inflated. Investors are advised to perform deeper due diligence, looking into a platform's reputation and operational transparency, before making financial decisions. Be mindful that the DeFi space can be unpredictable, with significant risks, as demonstrated by past events like the Terra collapse."