Hi Victor,
Your comment is correct to the extent that (1) the ED step is the most costly part of DMRG and (2) truncating the MPS does keep this ED step from being prohibitively costly. However there are many other parts of DMRG that would also be prohibitively costly if one didn't truncate the MPS, as each part of the algorithm has some dependence on the MPS dimension, which would be exponentially big if one didn't truncate it. But also, yes, the actual part about truncating the MPS which also involves shifting the orthogonality is a less costly part of DMRG.
Miles