Hey John,
a magnetic contactor in the supply line of a VFD is recommended, because it prevents the VFD coming up in spindle RUN mode after a power outage. What they usually mean, is that DON’T EVER USE a switch or magnetic contactor in the supply line of a VFD to switch between spindle RUN and STOP. This can indeed damage the VFD and the spindle.
The ONLY WAY to stop a running spindle, is the STOP command of the VFD, either from keypad in keypad mode, from intelligent terminal if in terminal mode (like used with the MASSO G3 CNC Controller) OR by a Modbus command (like used with the buildbotics.com and Onefinity Original/PRO/X-50 Controller).
The usual VFD control cabinet is wired so that
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a switch or magnetic contactor enables power to the VFD and the other components,
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a big red mushroom-shaped Emergency Stop button is wired to a ISO 13849 Safety relay like the Omron G9SE (datasheet)
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Finally it is mandatory that the setup when in Emergency Stop mode can only come back to spindle run mode after having pressed a Reset button. A possible Wiring is shown here. Usually the safety relay is wired so that when Emergency Stop is pressed, not only the spindle is stopped, but also the g-code program running in the CNC controller is paused and the machine is led to a safe mode (and stays this way until you press the reset button).