The only reason you would need an encoder is if the drive required it. Mach will output either PWM or step/dir to the drive. The drive needs some type of feedback from the motor. This needs to be either an encoder or a tachometer. A tachometer is a small generator connected to the servo which outputs a dc voltage proportyional to its speed. From this, the drive can tell how fast it is going and change the voltage output so that it is going at the speed it is commanded by mach.