No it doesn’t. Your rehearsal dinner can be as formal or as casual as you and your groom (and the hosts, traditionally the groom’s parents) want it to be.
If your in-laws are hosting the dinner and feel very strongly about the style of the event give them some leeway in planning, after all they are paying. But you should feel free to give them your thoughts and suggestions.
As for the rehearsal dinner’s setting, some couples may opt for a formal dinner, while others may prefer a casual BBQ. No matter what the setting the rehearsal dinner should feel relaxed and the entertainment is usually several toasts from members of the wedding. Today, many bridesmaids, groomsmen and even parents may opt for an interactive toast -- which is more appropriate for this pre-wedding even then at the reception.
Don’t make it a late night since everyone will have to get up early to prepare for the wedding. And definitely don’t plan a bachelor or bachelorette party for the night before the wedding.