The
system of using a name as a more human-legible form of a machine's (web host
in our case) address on the network has been happening since long past.
A
Domain name is what you type in your browser address bar. In www.cnn.com,
cnn is the domain name. Technically it is equivalent of the IP address of
the name. IP (Internet protocol) address is what Internet works on. It is
not practical for anyone to remember numbers like 213.45.76.214. Hence an easy
method has been created in the form of domain names. On the Internet domain names
are handled by DNS (Domain Name severs) servers. You register your name at the Internet domain
registrars. An example of which is nsi.com
History:
Originally,
each computer on the network kept a file called HOSTS.TXT which mapped an
address to a name (technically, this file still exists - most modern
operating systems either by default or through configuration, can check
their Hosts file to match a URL to an IP address before checking the DNS).
Currently in a twist, hosts files are also being misused by the numerous
spywares affecting Internet to direct traffic to destructive sites or to the
adwares beneficiaries.
However, such a system had inherent limitations,
because of the obvious requirement that every time a given computer's
address changed, every single system that wanted to communicate with that
computer would need an update to its Hosts file.
Function of the DNS or Domain Name
Server:
The growth of networking called for a more scalable
system: one which recorded a change in a host's address only in one place,
and in which other hosts would learn about the change dynamically. This is
the function of DNS or domain name system.

Paul Mockapetris invented the DNS in 1983. Today when
you ask for cnn.com, you are contacting the domain name servers on the
Internet to provide you with the IP address of the cnn.com. They provide it
to you over succession of contacts with other DNS servers on the DNS
hierarchy. Your browser finally gets the IP and then you get connected to
the cnn.com. With out the DNS you would have had to remember the IP address
of the cnn.com which is highly impractical.
Next: The right domain name