Do I need to invite all the out-of-town guests?
That's entirely up to you, but it is a common practice. If you're planning a smaller wedding or there aren't many traveling guests, then it's a great way to spend more time with the people you rarely see. On the other hand, if it's a large destination wedding or several guests will be coming into town, it may be best to streamline your rehearsal dinner guest list.
Who absolutely must be invited?
Although the list can be flexible, you should definitely include the bridal party plus their dates, both immediate families, and grandparents. From there, see what kind of numbers your budget and venue will allow, then add to the group as you wish. Stick with a hard-and-fast rule — no cousins, no family friends, etc. — to keep things fair and avoid offending any loved ones.
Do we need to send invitations?
In general, it's a smart move, if only to get a head count for both the host and the caterer. Depending on the formality of the affair, there's no need to go all-out with the invitation expense. If it's an upscale event, sure, keep things classy with a nicer invitation. But if you're hoping to minimize costs, it's perfectly OK to go with a simple card or evite that outlines the basics.
How did you handle your rehearsal dinner guest list? Any tips for planning brides-to-be?