Usually a single machine placed in a private residence can be used to host one or more web sites from a usually consumer-grade broadband connection. These can be purpose-built machines or more commonly old PCs. Some ISPs actively attempt to block home servers by disallowing incoming requests to TCP port 80 of the user's connection and by refusing to provide static IP addresses. A common way to attain a reliable DNS host name is by creating an account with a dynamic DNS service. A dynamic DNS service will automatically change the IP address that a URL points to when the IP address changes.
Think of your domain name as a street address for your website. Without a domain name, you would have to tell customers to visit your website at an IP-based url such as 184.108.40.206/~yourwebsite instead of yourwebsite.com. The former is not very memorable or friendly to human eyes and will surely result in not that many visits to your website. While it is not mandatory that you have a website domain name, nor is it mandatory that a domain you own be attached to a website, for a successful online presence you truly will want to get your own domain name to ensure your website has the proper air of professionalism and appropriate branding.
Hostname. A hostname is a plaintext name identifying a host in a given domain. On a local area network (LAN), a server's hostname might be a nickname like mailserver1. On the internet, a hostname makes up part of a web address and has three parts: the subdomain, domain name and top-level domain. For example, the hostname whatis.techtarget.com consists of the subdomain whatis, the domain techtarget and the top-level domain .com.
A complex site calls for a more comprehensive package that provides database support and application development platforms (e.g. ASP.NET, ColdFusion, Java EE, Perl/Plack, PHP or Ruby on Rails). These facilities allow customers to write or install scripts for applications like forums and content management. Also, Secure Sockets Layer (SSL) is typically used for websites that wish to keep the data transmitted more secure.