I want to have docker CLI to connect to remote daemon but do I need to install the whole engine including daemon on the local machine?
If you want to install Docker in Linux, then in the newest 1.12.0 release, Docker daemon and Docker client are in separate binary files.
This has been mentioned in release log:
Split the binary into two: docker (client) and dockerd (daemon) #20639
If you are installing Docker in Mac, then Mac OS binary is client-only: resource