Do I really need to know how to create databases?

This is not critical but as a web developer you should know how to create a database and how to write raw SQL. Having an ORM performing queries is great, but you should know what it does under the hood. Else what will you do after Rails? How will you link what you learnt on Rails with another framework/ORM/language? So if you have people with database skill around you this week, you should spend time learning how to manage a database (creating a database is simple: "create database dbname;"), when/how to create indexes (even with options that ActiveRecord does not support natively), how to perform joins, etc.

ActiveRecord is great for simple purposes but soon enough, as your application grows, you will need to go deeper in understanding what is going on on the database level. You have to know how indexes work, because Rails will not cover it for you (especially multi-column indexes), when to use triggers instead of callbacks and how not to end up with 17 joins in one query.

Today, there are many tools that remove the difficulty of needing to come up with elegant design, thoughtful architecture and mature code.   Some of these tools take the form of GUI tools, Frameworks, caching strategies or simply just buying more hardware.  Pounding a screw in with a hammer will absolutely work for lots of things and no one need ever know with a little patch up work and paint.  I prefer elegant solutions myself.  That said, not too long ago I left a terrible data model intact, ignored horrible code and solved a serious scalability problem for at least another year just by adding NGINX to the infrastructure.  Unless they quadruple in size again, they may not need to do anything else.   Drastic change is expensive and implementing NGINX was cheap.  I did not like the idea of the solution but it was a viable choice in this case. There does come a point where modeling your data based on the web application or object model will not scale well.  Learning to use a database abstraction layer well, will give you another tool to consider when implementing solutions.   Especially if you are doing it from scratch.   Besides scalability there are business, security, enterprise, performance reasons why you might want a mature database abstraction layer. I suspect you could be gainfully employed without learning anything about a database or its abstraction layers.  I think it is career limiting to only know a few tools and methodologies.

Web development is such a broad category, I can't even imagine making some sort of list of "vital" skills for it. Understanding the backbone of most web applications(i.e. databases) seems like it would be on that list though, if I were trying to write it.

As Michel says it is part of the skills that you should have and another thing that in some point you should go deeper and know what is the best option to use. If better to use a relational db or document oriented depending of the app that you will work on.

While it is important to have some knowledge of the underlying systems on which you depend, SQL and databases in general are inherently unfriendly to developers because they often cause you http://en.wikipedia.org/wiki/Object-relational_impedance_mismatch. In particular, the worlds of MVC and OOP don't always translate nicely to database tables and SQL joins. This is one of the reasons I created http://concoursedb.com/–a schemaless and distributed version control database that maps directly to the way that developers think about problems. For example, Concourse forgoes a query language in favor of an expressive programatic API and http://concoursedb.com/blog/index-all-the-things/ so you don't have to worry about it or other mundane tasks that detract from actual app development. https://github.com/cinchapi/concourse is open source. I encourage you to give it a try as you start to build more database backed web applications.

I agree with Pawel, Michel and Gaetan! It's always better to keep learning and I think it's important for a web developer to understand SQL, how to  build manual queries, and how to create and maintain a database. Check out this post that may help you in future. http://www.allerin.com/blog/ruby-on-rails-and-database/