Remove stalks from chilies and de-seed if you want a milder dip, though this defeats the purpose of nuoc cham. Pound garlic in a pestle and add chilies one by one, processing until you get a fine paste. Add sugar and lime pieces and pound to a pulp. Remove to a small sauce bowl and add water, vinegar, and fish sauce. Mix well and serve. Variations on the sauce can include chopped coriander, chopped ginger, pineapple, and any fresh herbs.
One of the problems with fish sauce is that, unlike impoverished peasants, I don't have to season bushels of rice and I really don't like the taste of old fish in the thick brown sauces. Cooking tends to remove the smell some but the dips are uncooked. Piquant dips do double duty as condiments and seasonings in Vietnamese cooking. The base for these is always nuoc mam and the better clear versions like Thai Golden Boy are almost mandatory at least for me. You can add ingredients such as lime juice, chopped chilies, chopped nuts, spring onions, fried garlic, ginger and fresh herbs such as coriander, sweet basil, and mint.