A recent job that is very relevant to the jobs I'm applying for was a 6 month contract that a close friend from childhood hired me for. Is he obliged to mention that relationship in the letter, and if so, will that mean it will have less weight?
I've never heard of anyone having to mention that they were a good friend of a former employee in a reference. The reference should look and be a professional one and stick to the working relationship rather than the personal one.
So basically, don't mention it.
As to how it would be viewed at an interview if it was mentioned? I haven't seen a reference like that, but it's not something that would work against you if I did. But interviewers are all different. Good reference letters serve a purpose, but up to a point they're not usually THE deciding factor in getting a job
It's a grey area. If this is a very close friend with a relationship that is largely outside of the workplace, it's not wrong to mention it, and it may be the most ethical thing to do. I wouldn't see it as counting for or against the reference.
The biggest count for or against the reference is the quality of the writing of the reference. The reference should not be about how likeable you are or about your great qualities as a personal friend. It should be about the great work you've done and the professional skill set you've demonstrated on the job.
If your friend can write an honest letter that speaks to your professional qualities, then he can be a good reference.
It certainly gets muddy, but there is a definite difference between friends that you'd have regardless of what career you were both in, and friendships you've built as part of your profession. Doesn't mean the friendship is better or worse either way - the part of awareness is where the reference's esteem of you has more to do with the non-work stuff than the work stuff.
It is almost expected that the person is a friend. The career world is half who you know and how well you know them.
I'd leave how much disclosure should be made to the person providing the reference letter. If they give none, none is alright. If they gave some, that's enough. If you're asked, disclose as much as you want. When I've been asked for reference letters in cases like yours, in the second or last paragraph I will bury a comment like "Daniel is a very passionate, hardworking individual that I've had the great experience of knowing for 18/many years." Because of my age and my earlier comments in the letter, it would then become apparent that we've known each other in both the professional world and in childhood.