I am new to IRC in general and it seems as though even DCC requires a server connection first. Is that correct? Is there any chat client that would allow a set of networked local users to chat when no server is available but also connect to a server when that is the need?
No, he isn't. Whatever he's defined as "IRC Client chat" (in the topic) requires a server. He hasn't specified whether this server is central, or distributed, IRC or DCC. It's still a server.
An IRC server is not required to initiate DCC chat when specifying an ip address. I referred him to the dcc server section of the help file for instruction on how to do this. If this is not what he meant, then he needs to clarify.