Is seeding peppers a must when making hot sauce

The seeds of all peppers are bitter, you won't notice this when you are using a single pepper in a large dish of food, but if you make hot sauce without removing the seeds you will have a noticeable, and possibly unpleasant bitterness. Grinding the seeds will add more off flavors, so it is worth the effort to get rid of them.

First, the most capsaicin (heat) is in the pith of the peppers. You'll find it to a lesser extent in the seeds. Keeping the seeds will definitely change the texture of the sauce, but if you like that texture then by all means, use them. You can also purée the sauce to make it smoother. I would start with the flesh of the pepper and then use the pith to alter the spiciness to your taste.

The bulk of the capsaicin is in the embryonic orange felt enclosing the seeds. That makes the seed area the strongest contributor to pungency. The seeds themselves are no benefit in either taste nor much hotness. So for your aims, it makes sense to remove the seeds while making sure that you don't remove their bedding. Consider using gloves for that kind of sorting action (and actually most handling of habaneros). Or consider it as a good training opportunity for learning to avoid touching your face in the age of COVID-19.

I leave seeds in while either cooking my peppers or fermenting them.

Once I'm ready to process it into sauce, I run the peppers thru a masticating juicer. I end up with the most amount of pulp in the sauce that way. And zero seeds.

I always figure if you want the hot sauce hotter leave the seeds in, if you want just hot sauce and not killer hot sauce take them out. I would take them out with habanero peppers. I like the flavor of hot sauce with onion garlic and tomato. I don't think it should be painful......good luck.