ArcIMS users can connect to and read spatial data directly in an Oracle 8i/9i/10G or Microsoft SQL Server database without having to use an ArcSDE application server. This method of connecting directly to your spatial database without using an ArcSDE application server is called 'direct connect'. Each ArcIMS installation has direct connect capability built into it.
For more details, ArcIMS 4.0.1 users should refer to the Documentation\Direct_Connect directory on the ArcIMS CD-ROM.