is an fms server necessary while using flash media player? how does one do http streaming using flash player?
By FMS I guess you mean RTMP Stream (against progressive 'stream') ?
An on-demand RTMP stream will serve you exactly the portions of requested content whereas a progressive stream will download the whole file into the clients browser cache (the same way it does for an image). Thanks to that you can jump to a position in the video even though the preceding part hasn't been loaded, this is a great feature if you are dealing with longer videos.
A progressive video is easier to set up as you just have to deploy it on a simple HTTP server, this can also be a bad point as you may overload the HTTP bandwidth whilst the RTMP streaming service can be hosted on a dedicated server specialized in streaming so you can achieve an optimal service. FMS 3.5 provides dynamic streaming meaning the stream will get adapted depending on the users bandwidth.
Basically :
If the video is a mayor concern for your website, and/or you want to provide an enhanced user experience in terms of quality and response you should go for RTMP streaming (FMS, Red5, etc.). Otherwise don't complicate things, just upload it to your HTTP server and download it progressively.