Crystal is not required in PLL and DCXO bypass mode. However, it is required in Normal operation where DCXO and PLLs are used and not bypassed. In Normal operation, Crystal is required for the DCXO as these devices are used to provide clock redundancy, in which it will provide a clock that can be switched between two input reference clocks, if one of them happens to fail. These reference clocks can be of the same frequency or of different frequency but a fixed multiple of each other. It will also provide smooth transition between two frequencies without any runt pulses at the output. The frequency of the crystal oscillator used must be a factor of the reference clock frequency that should be selected using the Table1 of the specification.
The CY23FS04 must use XTAL for device startup or you may apply at least 3 clock periods to XIN.