You can make up a name for your Lan yourself. One way to do it is with the "domainname" command. Another, is using the Network Setup in the MCC.
Naming your computer localhost will cause a problem because that is the alias for the LO interface. Using that name on another computer for instance will reach that other computers LO interface rather than your computer.
I'm not certain about the consequences of naming your domain "localdomain", however, I think this would be an alias for the network address of the LO device. I.E. 127.0.0.0 and netmask 255.0.0.0 .
You could use localhost.localdomain when refering to your local machine offline. For example using email@example.com
to access root's mail on your host. This supplies a shortcut where the linklayer is bypassed, because it isn't necessary to access the network.
The dhcpd client service will supply your host's name "hostname" to the server. It will also gather information from the server and modify certain files such as /etc/resolv.conf with items such as the name server addresses.
I'm not even sure if the file you edited was the right one. It would be better using the "hostname" and "domainname" commands on your computer, or to go through the MCC. I used to use Mandrake, but I'm using SuSE right now. The /etc/sysconfig/network/config file on my laptop doesn't contain a reference to my hostname.
There is a trick that some people use. Suppose that there is a website or host that you don't want the computer to reach. Adding the name to the /etc/hosts file and giving it the fake address of 126.96.36.199 (The LO interface address) will prevent accessing that site. Read the /etc/host.conf file if you don't know why this would work.