It depends on your end heat requirements. My old set up I was using standard 1” pex (7/8” ID) this worked just fine for just DHW (domestic hot water) and a furnace HX (heat exchanger). However whenever I tried to run my snow melt return temperatures quickly plummeted and the boiler couldn’t keep up.
Regardless of the water temp, it takes flow to get large amounts of BTU’s delivered to the final source. A simple way to look at it, temperature makes the heat, flow decides how much heat can be made.
My new setup uses Logstor (slightly larger than one inch) and all 1” copper pipe in the basement. I can run the dishwasher and both washing machines while the house is calling for heat, the snow melt is on and the wife is taking a shower with no issues of return temps dropping a large amount on the return to the boiler.
What your dealer is talking about is most likely fine if your just looking to heat your DHW and heat the house. If you plan on adding on to the house, adding a hot tub or pool thats to be heated or snow melt in the future that will run off the house circuit then stepping up to a larger underground pipe now would be cheaper in the long run rather than having to deal with issues from insufficient flow later.