If you want to use an external contacts list, the Contact list and Contact list URI settings are mandatory. Publish presence is optional; when enabled, the phone sends out "PUBLISH" SIP messages with the phone's status, e.g. busy, etc.
To dial a contact on the phone, enter the first letter of the name you are searching for. Type more letters if the name shown isn‘t the right one, or scroll through the list. Press to dial.