I am a newbie for XDK iOS Development and I was wondering how does it compile iOS apps without a MAC? If its cloud build, how does it work even when I am offline?
It is a cloud build, there is no support for off-line builds. When you do a build, it bundles your code, sends it to the cloud and does the build there. Then you download the resulting app package.
Note that there are a couple ways to test your app without building it. One is to use the emulator, which requires no build but supports only a fixed number of plugins. The "Debug" tab is more powerful, as it can support most plugins, but it requires building the debug container with your set of plugins at least once (requiring a net connection). After that it should cached it so you can Debug offline if needed.