Whenever a Java class is compiled, the processor analyzes the annotations to build the testdoc information. Without the processor the testdoc view (aka stories view) would not show any stories.
Especially if you are looking for an alternative that does not depend on annotations, the
moreunit eclipse plugin is an excellent option. To our knowledge they do not support test stories as the testdoc plugin does, but they provide many other very helpful tools to generate, refactor and run unit tests.
The project has to be compiled with the processor active.
The .project file requires the org.eclipse.jdt.core.javabuilder as buildCommand. This may be a problem if you sync the eclipse configuration with Maven.
Each test method is required to have a Uut annotation (either at class or at method level).