Hi, Michael!
Disney Dollars certainly are not mandatory! They are just a fun currency that you can use while in Walt Disney World. Before Gift Cards became all the rage, guests often purchased Disney Dollars to give as gifts or bought them ahead of time to save for a vacation. Or, some just bought the Disney Dollars because they are so stinking cute! They are getting a bit more difficult to get as you can no longer purchase them in local Disney Stores. As far as use of your Disney Gift Card, it is accepted almost everywhere in parks, resorts, restaurants, and gift shops. Click
HERE for more information.
As far as how much money to bring, plan on money for souvenirs (set a limit ahead of time!), tipping, and for meals if you are not on the Disney Dining Plan. For all these extras, you can pay cash, use Disney Gift Cards, credit card, or charge back to your Key to the World card, or whatever method is easiest for you.
Wishing you and your family a magical Walt Disney World vacation!