A DNS server contains a database of domain names and their associated IP addresses. It translates domain names to IP addresses, allowing computers to connect to servers. The main function of DNS is to translate domain names to IP addresses. Each domain nominates authoritative name servers for its DNS records. The document then provides instructions on configuring a DNS server on a generic server to map host names like "PC0" and "PC1" to their IP addresses, and testing the name resolution by pinging hosts by name.