all you are doing with recirculation or "vorlaufing" is getting the grain and particles out of the wort. the bags i've seen and used have a fine enough mesh, much more so than you would get from a false bottom or even a coil. not much gets through and it sets a grain bed up in its own way...it always pours through the bottom of the bag, after all.
if you have TOO much grain in the boil, you could get some tannins or astringency. this is why you vorlauf,
not for clarity. but anything in the boil will fall out in the primary after fermentation regardless. this is not a problem with this method, anyway...i do not notice any difference between this and my batches using the other method.
now, if you want a brilliantly clean, extra clear ale, you CAN go to extremes. a friend of mine filters at every stage. he vorlaufs and has an inline filter for the mash. he recirculates and has a filter for the boil, and he sometimes filters after fermentation is complete (with a wine plate filter.) this makes some great beer with excellent clarity and they are indeed very smooth. however, it is a lot of work and i could get very close using my method and simply filtering after fermentation is complete. it just depends on how anal retentive you want to be.
in any case, my beers certainly aren't cloudy, the SMaSH i have on the counter now has brilliant clarity after only two weeks in the primary...i can see the whole bottom bit of trub