I am new to the world of setting up servers and am baffled by the term hostname and fully qualified domain name. For example, if I want to set up a server that hosts files on the local network i.e. a file server, what would I use a hostname such as myfileserver or something else? What if I wanted to set up a web server, mail server, etc that external users could access?
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Your hostname is the name of your computer.
Your fully qualified domain name is your hostname plus the domain your company uses often ending in .local.
So if the name of your computer is bob, and your company's domain is contoso.local, your computer's fully qualified domain name is bob.contoso.local
In the case of a domain like contoso.local I did not use an "external" internet domain name. This name doesn't have to be the only way that you address the server. If you make it available by its IP address you can use DNS or that IP address to allow external users to access it.
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The hostname is just the computer name and the fully qualified domain name is the hostname plus the domain name after it....
hostname: bigbox fqdn: bigbox.mynetwork.com
or commonly the fqdn ends in .local instead of .com but that is environment specific.
Usually you'd have a private DNS that has your .local domain setup in it and a separate DNS server for the public where your .com lives. You don't want to put your .local domain on a public DNS server because someone will have a way to get a list of all your hosts and it exposes your network to attack.