@shanls96 Yes, you need to have import tray on if you want MCCC to be involved in the process. Otherwise the game is going to do it all randomly. MCCC doesn't actually generate sims at all, the game does, the setting to use the tray is just a feature that keeps the game from doing wacky stuff with the randomization.
And yes, "tray" is your gallery. It's a terminology for the gallery that comes from previous sims games.
And lastly, yes, it's beneficial to have a good amount of households in your gallery if you are going to turn that setting on, otherwise it's not going to do much. Thus, you will want to either make a lot of sims yourself, or download a lot, or a combination of the two.
You absolutely do not need to use that particular setting though. It's not necessary for MCCC to function for everything else it does.