Starting circuit wiring

The alternator only supplies whats needed right? So youre not drawing more than 30 amps. But what exactly is the fuse/breaker protecting? The alternator itself?

Yes kind of, but there is a burst of charge right after startup that rebuilds the battery so it can go higher.

If you have a short to ground in a diode inside the alternator it would burn that entire charge wire to the ground, and possibly the entire car with it.
If this were to happen the relay would break the connection and keep this from happening.