"does not support relays" means that you are attempting to send outbound SMTP traffic to a mail system that is not set up to accept your connection. It probably means that you are not sending the logon credentials and your iPhone is configured to not have a user name and password sent as part of the security.
(Back in the early days in the internet, some 30+ years ago, all mailers would simply do the relay operation. If the message was not for their site they would simply pass it along to where it was intended to go. That was before "SPAM" was discovered, much to the dismay of the Hormel Foods Corporation.)
Instructions on how to properly configure an iPhone with Email at DreamHost are in the wiki at the URL
If you follow it (changing the names where appropriate in the example to your real domain name) then you should not have a problem.