DNS is the glue that holds a windows 2000 domain and active directory together. It is a hierarchically distributed database that holds records that match names to IP addresses. When you create a domain under windows 2000, you must have a DNS server in that same domain so the domain can update its records in it and notify all other DNS servers where certain services are located, like the global catalog or where the domain controllers are at.
By default when dcpromo asks for a DNS server and you tell it to install it locally on the machine it sets itself up in the Forward Lookup Zones. No reverse lookup zones are created by default so if you want them, you have to set it up manually. The reverse lookup zone is for translating an IP address to a name. Each zone, both forward and reverse, are standard by default, but if your running Active Directory then you should place each zone as an AD-integrated zone and that will allow you to do secure dynamic updates, something that a standard zone cannot accomplish. .
If for some reason when I setup DNS it isn't working properly or somewhere alone the line it stops working then I have some troubleshooting tools that will help me diagnose what went wrong and how to fix it. On the Monitoring tab of the Server properties I can test simple queries as well as recursive queries to the server and it will tell me if they each pass or fail. Another tool that I have at my disposal is nslookup. Nslookup is useful for diagnosing and solving name resolution problems, for verifying that resource records are added or updated correctly in a zone and for debugging other server-relate problems.