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The eConnect libraries must be installed (eConnect Documentation) however the full eConnect Runtime module does not need to be installed.

2. Does Dbsync DBSync need to be installed on the same machine as that of Microsoft Dynamcs GP?

DBSync Microsoft Dynamics GP (GreatPlains) adapter can be either configured on the same instance GP is installed or on a remote machine which can access GreatPlains GP database.

3. What are the limitations of DBSync integration with Microsoft Dynamics GP?

The eConnect interfaces do not support every object and interaction available within Microsoft Dynamics GP (Great Plains). If your integration scenario requires working with objects from other modules or more sophisticated queries, you will need to use our Database Adapter for Microsoft SQL Server to connect to backend database tables directly. While this is an option, it is recommended to avoid accessing Microsoft Dynamics GP (GreatPlains) database directly to maintain data integrity and business rule executions.