RS485 network ground pin - when to connect?

It is a myth that you can make RS485 interfaces work without the Common (C) ground wire connected up between the various devices on the bus. The receiver is only capable of measuring the relative potential between the A and B signals when the common mode voltage of the A and B inputs is kept within -7V to +12V of the GND reference of the receiver.

The idea that both sides of the interface being operated on batteries would somehow make a difference is also a myth. It all comes down to what the common mode voltage is between the transmitter GND and the receiver GND. The third wire connection keeps the common mode voltage under control. Without it any undue influence to either unit or to the bus between the two can lead to the common mode voltage going outside the -7V to +12V range. This influence could be due to coupling into other systems through EMI. It can also be common to see this show up as AC variation that follows the mains line frequency.

You are right in that a pure receiver could just measure the difference between the two signal lines. However, any means to do that will have some common mode range that the individual signals must stay within. The spec gives the common mode range that nodes must be able to tolerate.

Without a third reference wire, there is no way to define this common mode voltage, and then there'd be no way to make a receiver that is guaranteed to be compliant.

Even if your receiver was set up so that the data lines drove opto-isolators, for example, you still have a common mode voltage limitation. It might be a few thousand volts instead of a few volts, but there will always be some common mode voltage beyond which the receiver won't work anymore.

So far that was just about receiving the RS-485 signal. Driving the RS-485 signals is much more limiting. The data signals are specified as being 0-5 V nominal with respect to the ground wire. Without a ground wire, you have no way to ensure that. The circuit that drives the two signals will be referenced to something. That something needs to be connected to the other transmitters and receivers on the bus.

Based on the other answers, I'm going to offer this as an example. Please bear in mind that this answer follows the old adage "sometimes a little inaccuracy saves tons of explanation".

Let's say you have two RS485 devices that are electrically isolated. You connect up the A and B lines as normal. However due to stray capacitances and other electrical engineering voodoo, one of the devices is floating at 3000 volts higher than the other.

No problem right? The receiver just sees lines A and B coming in at 3000V and 3012V, it picks out the 12V differential which is within spec and off it goes?

Well because of the stray capacitances, the devices aren't actually 100% isolated, and so the receiving device actually sees 3000 volts on the A and B lines relative to its own power supply. The RS485 chip it's using is only rated to provide 2500 volts of isolation, so the incoming voltage is able to jump that chip and fry some other part of the circuitry. The available current at that voltage is tiny so you wouldn't even see a spark, but it's enough to cause ESD-like damage to other ICs in the circuit, stopping them from working properly.

By connecting a GND wire between both devices, the 3000 volt difference will be removed by that same microscopic current travelling through the GND wire instead of the other ICs in the device, and the 3000 volt offset on the A and B signalling lines will disappear.

In some ways the GND line is serving a similar purpose here as a pull-down resistor, ensuring that all the signal lines are at known levels rather than randomly floating all over the place.

Yes, the RS485 spec only looks at the difference between the A and B signal lines, but each device also has a maximum permitted voltage between its own power supply GND and the signal lines. Stopping that particular voltage from going out of range is done by ensuring all the device's GNDs are the same, so a GND wire between all the RS485 devices does just that. Yes in theory electrically isolated devices won't have massive voltages between them, in practice it seems isolation is not always perfect so don't count on it.