You must specify a name server (by IP number). This IP address allows your workstation to find and query the name server. The name server provides translations from machine names to IP numbers.
You are allowed to specify up to three name servers. The second one is used if the first fails and so on. Note that if the first fails, you will experience noticeable timeouts (delays).
You may also set a domain name here. This domain will be appended each time you do a name lookup. This saves you from continually having to provide the full name.
Search domains are like the default domain, but you are allowed to set six possibilities. Be aware that search domains take precedence over the default domain. So if you use this feature, you are defeating the default domain. Search domains are seldom used and will generate extra traffic between your station and the DNS. This may be important if the DNS is far away.