How Do Domain Names Work?

The domain name system (DNS) works much like a telephone book, providing location and contact information for the names listed. The location of a website is a numeric IP address. An IP (IPv4) address consists of four octets such as 72.167.177.75, each number a possible value 0-255. When a domain name is entered in a browser the numeric location of a website is determined behind the scenes. Clearly a name like EzineArticles.com is much easier to remember than indeterminate sequences of numbers. Another advantage is that domain names are static, whereas the physical numeric address of a website may change.
How do I get a domain name?
The process of registering a domain name typically begins with a search to ascertain availability. Once a search has determined a domain name is not currently registered, one may acquire it through a registrar for a small fee, usually $10-$20 annually. Registering a domain name does not mean you have a website. Once a domain name has been registered its records may be modified to point to a website.
Other ways domain names are used
Many domain names are not associated with an actual website. Domain trading is a major industry similar to that of real estate investment. A domain trader may have hundreds, possibly thousands of registered domains listed on the market. A $10 registration fee for a new domain may sell for hundreds, even thousands of dollars making domain trading a lucrative and competitive business.
Cash parking is a method of generating revenue for a domain not in use. A cash parked domain is usually associated with relevant advertisements from which the owner shares in the generated click-through revenue. Each time an advertisement is clicked the advertiser pays a fee that is shared with the entities that directed traffic to the paying website.