Correct. Facebook doesn't work with IP addresses. You'll need to have a domain that Facebook can point to. Most other functions of JFBConnect should work, but the login functionality will not work with just an IP address.
If you want to just get setup to test right away, there are always free domain/dns providers, like:
www.dot.tk/en/index.html?lang=en (get a free .tk domain)
dyn.com/dns/ (use some pre-selected domain names and point to your server)
You can always switch your Facebook App over to a more permanent domain later on without any issues.
Hope that helps,
Alex