No it is not mandatory to use SRW Exits or User Exits for reports or forms in Apps the main intention of using User Exits is when we want to do the computation or calculations or perform some functions apart from oracle say suppose we have a DLL coded in VB or VC then we need to use the user exits.

the main intention is to pass the control while still keeping the session alive to outside third party tool other than or to any other oracle functions.

one of the best functionality used is while preparing reports based on account codes or reports where we print chart of accounts along with individual entries of accounts. here we call the srw exit for FND FLEXSQL and FND FLEXIDVAL both these functions are AOL functions are are specifically used to pass the control out of the current report go to the chart of accounts of the Buisiness group level and find the relevant entires against the account code of present in the chart of accounts present in the SOB of that organisation unit.

other wise we do have normal reports where we donot use user exits.