If you want to resolve the hostname of your web server from another box, you either need a DNS server or a hosts file entry. It depends on how many hosts will be trying to resolve your web server as to whether the work to set up a DNS server is worth it to you.
On a small scale it's not too hard to do and there's some info
here that might help. And yes, you can run a DNS server on the same box as your web server
