It works for me sending mail from the server to other accounts on the same server. The problem comes when I send it from a remote client.
However, I think I've sort of figured out the problem. When I send mail to "bob" from a mail client, it automatically appends the hostname of the client. Kmail has the ability to configure a default domain for sending mail, so if the clients are kmail the problem can be solved.
Unfortunately Mozilla mail client, for example, doesn't see to have this ability. With Mozilla I have worked around by creating entries in my address book for "bob@mailserver" and if I type "Bob", Moz helpfully pulls out the right address.
I don't know if there's a better way round it. Since the mail does have an @xxx extension by the time it gets to postfix, the only way round it that I can see would be to configure postfix to treat all mail with a local domain as local to that server. So email@example.com
would hit the mailserver.acme.com box and be forwarded to local mailboxes for bob and marge.
Maybe I could do this with procmail, but I don't know how right now.