In order to prevent data loss and to have High Availability, it's good to have at least one replica so that your system can survive a node failure without downtime and without loss of data.

Mainly yellow status is due to some shards that are not allocated. If your cluster is in recovery status, just wait if there is enough space in nodes for your shards.

If your cluster, even after recovery is still in yellow state, it means you don't have enough nodes to contain your replicas so you can either reduce the number of your replicas or add the required number of nodes.

When you have lost data (that is, one or more shard is missing), you need to try restoring the node(s) that are missing. If your nodes restart and the system goes back to yellow or green status you are safe. Otherwise, you have lost data and your cluster is not usable. In this case, delete the index/indices and restore them from backup (if you have it) or from other sources.