In what ways is Mercutio's death important in the development of the plot in "Romeo and Juliet"?
Mercutio's death serves as the "point of no return" for the primary characters in the play; there is no undoing the tragedy that befalls those involved once Mercutio has died. When Tybalt kills Mercutio in their duel, Romeo finally loses any sense of composure that he once retained and responds by killing Tybalt.
This unleashes a huge backlash. Romeo is banished from Verona as punishment for his crime. The Capulet family is sent careening into grief by the loss of their beloved cousin and make the rushed decision to push Juliet into a marriage to Paris. Devastated, Juliet devises a plan to fake her own death—a plan which goes awry when Romeo does not receive the news of this in time and kills himself in the Capulet crypt.
Thus, we might argue that Mercutio's death causes a chain of events that ultimately leads to the deaths of Romeo and Juliet themselves.
Mercutio's death serves a few functions in the play. In reference to the plot, it is Mercutio's death that sparks Romeo's feelings of honour and loyalty for his friend, which in turn leads Romeo to kill Tybalt. Subsequently, Romeo is punished for his actions by being banished from Verona and kept from Juliet.
Mercutio's death is also the catalyst that leads to the climax of the play, which is Romeo killing Tybalt. At the beginning of Act III, scene i, Romeo refuses to fight Tybalt. Having just come from his wedding to Juliet, Romeo feels too much love to fight, especially to fight a relative of Juliet's. After Mercutio is killed, Romeo takes action and kills Tybalt in revenge. This leads the play down a very distinctly tragic path. After this moment, Romeo and Juliet can never have a happy ending.