Dalic guided the side to the final four years ago, where they lost to France, a historic achievement for a country of 3.9 million people.
"We are optimists with a reason but have to be realistic," Dalic told reporters presenting his 26-man squad.
"We'll go step by step, we are rather self-confident after the Nations League matches," added the 56-year-old.
In September, they secured their place in the last four of the Nations League.
"There is no pressure, no big euphoria. The first game will be the most important," Dalic said.
"Now we think (on how) to pass the group first," he added.
Croatia play Morocco in their opening Group F match on November 23 before meeting Canada and Belgium.
Modric said recently he would end his international career after the World Cup in Qatar.
Apart from the Real Madrid star, veteran players include defenders Domagoj Vida (33) and Dejan Lovren (33), both of whom Dalic stressed are in good shape.
Asked to compare the team with the one four years ago Dalic said the then squad "played together for ten years before being rewarded in Russia".
"They are potent and capable, but it (Croatia success) will not be possible without older ones."
Goalkeepers: Dominik Livakovic (Dinamo Zagreb), Ivica Ivusic (Osijek), Ivo Grbic (Atletico Madrid/ESP)
Defenders: Domagoj Vida (AEK Athens/GRE), Dejan Lovren (Zenit Saint Petersburg/RUS), Borna Barisic (Rangers/SCO), Josip Juranovic (Celtic/SCO), Josko Gvardiol (RB Leipzig/GER), Borna Sosa (Stuttgart/GER), Josip Stanisic (Bayern Munich/GER), Martin Erlic (Sassuolo/ITA), Josip Sutalo (Dinamo Zagreb)
Midfielders: Luka Modric (Real Madrid/ESP), Mateo Kovacic (Chelsea/ENG), Marcelo Brozovic (Inter Milan/ITA), Mario Pasalic (Atalanta/ITA), Nikola Vlasic (Torino/ITA), Lovro Majer (Rennes/FRA), Kristijan Jakic (Eintracht Frankfurt/GER), Luka Sucic (RB Salzburg/AUT)
Forwards: Ivan Perisic (Tottenham Hotspur/ENG), Andrej Kramaric (Hoffenheim/GER), Bruno Petkovic (Dinamo Zagreb), Mislav Orsic (Dinamo Zagreb), Ante Budimir (Osasuna/ESP), Marko Livaja (Hajduk Split)
