In Catholicism, is the Eucharist observed during funerals? First off I know next to nothing about Christianity.  Well, I do know that Catholics have more traditions and ceremonies than Protestants do, and I know about Eucharist.  What I didn't know is that Eucharist is used during funeral ceremonies too.  A Buddhist classmate told me he recently attended the funeral of his boss (he did not know about the boss's religion but was told the funeral was held at church and he felt it would be a kind thing if he attended).  But he told me that he did not know anybody there and there was lots of chanting and at some point the priest started administering Eucharist and people were lining up and he started freaking out because he doesn't drink and he did not want to be impolite either so he kind of just left! 

I told him I doubt anybody would have forced him and maybe they don't even use wine anyways, but anyhow, though I was aware of Eucharist during regular mass, I was not aware that they also do it during funeral.  Can someone explain to me its significance during funeral or if it's shared by all Catholics?  Thanks.
A funeral Mass is a common practice

A Mass is by definition a Eucharistic Celebration  

As @AthanasiusOfAlex pointed out, a funeral is not required to be conducted in the form of the Mass, but for Catholics it is a common practice. (Anecdote: In the past five years, I've been to nine Catholic funerals, and all were celebrated as funeral Masses). In the case where a deacon, rather than a priest, is the clergyman present for the funeral, a funeral would not be performed as a Mass. 


  As ministers of Sacrament, deacons baptize, lead the faithful in
  prayer, witness marriages, and conduct wake and funeral services. (Source = US Conference of Catholic Bishops)  


There are also certain days that a funeral Mass will not be held, Holy Thursday through Holy Saturday included.  (Thanks @Eques and @AthanasiusofAlex)    

When the funeral rite takes that form, it is worth remembering that a funeral Mass is still a Mass, which is a Eucharistic celebration.  When celebrated as a Mass, it follows the usual form of the Mass -- Liturgy of the Word followed by Liturgy of the Eucharist -- which includes receiving Communion for those who are Catholic, and who are not under the burden of mortal sin.  During the second half (after the homily) the liturgy of the Eucharist includes the celebrant offering and the faithful receiving the Body of Christ and the Most Precious Blood of Christ.  

There are a number of references in the 3d edition of the Roman Missal that provide additional guidance and instructions to the clergy concerning the funeral Mass (a word search finds 26 separate uses of the word "funeral"), none of which make particular mention of Communion.  On pages 1371 and 1372 of the linked version are some recommended prayers for the occasion of a funeral Mass.   

Your friend was worried for no reason, however, being unfamiliar and even puzzled with the Roman rite is not uncommon for those who do not usually attend Catholic Mass.  It is not surprising that he wasn't completely at ease with a celebration foreign to his tradition and practice.  (When I attended my first few Masses, before I became a part of the Church, it took a bit of getting used to).  

Funerals are for the living, so the best one can do at such an occasion is to be respectful of the family and friends of the deceased, and to be as polite and kind as possible.