What is line of sight?
For two panoramas to have line of sight, you need to be able to see the center of one panorama (center meaning where the camera is located) from all other connecting panoramas.
For example, this shoot had clear line of sight between all the panoramas in different rooms:
While in this shoot, with walls and closed doors blocking the view to other panoramas, there is no line of sight at all:
Why is line of sight important?
Line of sight is how connections are made between panoramas. If line of sight and that connection isn't there, then it can be difficult or even impossible to know how to accurately position each panorama in your tour, which will result in badly built tours (if they can be built at all).
If there are walls and closed doors between your panoramas, it also diminishes the navigation experience, because you won't be able to see which pano spots you can jump to, and you'll end up flying through walls if you try to move.