Hi Kungpow,
The AD FS is used for Single Sign-On (SSO). The function of DirSync is to synchronize objects from the local AD and enable you manage users in on-premises AD.
If your purpose is managing users through Dirsync, ADFS is not necessary. But if you need some features in ADFS, Dirsync is required.
@Darrell, thanks for your valuable reply.
More information:
Office 365 SSO Content Map
Single sign-on roadmap
Best Regards,
Bourne Zhang