Do i need to create sql database in dreamfactory, or can I use use my existing database hosted in my server?

Do i need to create sql database in dreamfactory, or can I use use my existing database hosted in my server?

You need to connect to your existing database.

DreamFactory does not create databases on the fly. It merely connects to them.
There is sometimes confusion about this because the Bitnami package version of DF comes with MySQL and MongoDB already running and connected.

​In my instance of DreamFactory there is nothing such as connection string
(DCN), may be thats the reason i am not able to connect my existing
database to DreamFactory. Also, what are name value pairs in Driver option?
Please help.

You likely don’t need the name value pairs in the driver options. Those are for special use cases where you need to custom configure the driver.
However I can tell from your screenshot that you will not be able to connect to your database with the current information.
You are attempting to connect to a system that is on your local network, using a server that is hosted in the cloud. This will not work. You database will need a publicly addressable IP or hostname.