Neither is required, but it is best practice to install the NetApp Host Attach kits. This will install the DSM software and set your HBA's, and Windows registry settings to the proper values to support failover. The host attach kits are free so there is really no reason NOT to install them.
The DSM is not included as part of the host utilities.
If you have an active/active system with connections to both controllers you'll have mulitple paths to the LUN even if you only have a single path in the host (assuming the host can access both controllers).
To install the Netapp DSm you need to have the license for it . im not sure whether it comes free or you have to buy the license. But as per netapp best [practice for fc luns on windows Netapp dsm is preferred over microsoft dsm. I have faced issues with microsoft dsm whith fc path misconfigured errors .but once i installed the Netapp dsm the errors did not appear again
Are you sure you can do FC multipathing without DSM?
This is what NOW pages say:
The Data ONTAP® DSM for Windows® MPIO is a device specific module (DSM) that works with the Microsoft Windows MPIO drivers (mpdev.sys, mpio.sys, and mpspfltr.sys) to manage multiple paths between NetApp and IBM N series storage systems and Windows host computers. The DSM includes the storage-system-specific intelligence needed to correctly identify paths and to manage path failure and recovery.
The host attache kits actually include the DSM software. Again, even in a test scenario there is no reason to not install these. I have generally found you always want your test environment to be as near production as possible anyway.
Just to elaborate a bit, the Host Utilities (HU) should always be installed -- DSM is actually optional (as there is an MS one) but but needed for a cluster setup to correctly distinguish between primary/preferred and secondary/partner paths.
In short, install HU & DSM and you'll be fine (SnapDrive as well if you want to).