Free Dining is offered by Disney Resorts, not Disney in general.
So DVC does not participate. It is a marketing tool, to book rooms at full Rack Rate, with the purchase of a package and tickets.
Even though there is Disney in DVC, there are many divisions of Disney and each has it's own purpose and marketing.
If you wish to pay full Rack Rate, buy the package with tickets, then you can get free dining.
If you wish to use your DVC and book with points, you can't.
Do not be surprised that your question will get responses such as Free Dining is not really free, etc etc etc.
For some reason this question, seems to upset other members on this forum especially when DVC members are disappointed that it is not offered.
I think for a new member it is a natural question to ask.
Actually you are getting a better deal by using your DVC points, which is a discount on rooms and pay your own dining.