Is DNS verification required, and if so, why?

Yes and no.

It is required if you are using CDN, but it is not required if you are only using the Online Services (Image Optimization, Page Optimization, etc.).

DNS verification is our way of making sure that your DNS is configured correctly for use with CDN. During the test, we toggle the DNS to point your site to PoPs and then check whether it is indeed pointing to the PoPs. If successful, your site is considered Verified. We will automatically generate an SSL certificate (if you’ve enabled that option), and CDN will begin handling your domain’s traffic. If there is a failure at any point in the verification process, the DNS will be reverted back to your origin server. You can then fix your configuration and try again.