naming conventions...

[mad pancake]

I'm a newbie at playing with DNS and I just set one up on a FreeBSD
machine. The said machine is the primary DNS of my little network, and
has given IP of 192.168.111.2. It's given the name dude2.applewood.us.

Now, I have question regarding on what nslookup should return. e.g.

Server: X1
Address: X2

Name: Y1
Address: Y2

(X1, X2, Y1, and Y2 are the responses from nslookup)

If I enter "nslookup 127.0.0.1" should X1 be "localhost" (or even
"localhost.applewood.us") or the given hostname ("dude2" or
"dude2.applewood.us")? And how about Y1 and Y2? And what if I query
"localhost"? Or how about "dude2"? When I put the reference in
resolv.conf for DNS look-up, should I put 127.0.0.1 or 192.168.111.2
for this machine?

TIA