On the Internet the hostname is an ASCII string, e.g. "foldoc.doc.ic.ac.uk" which, consists of a local part (foldoc) and a domain name (doc.ic.ac.uk). The hostname is translated into an Internet address either via the hosts file, NIS or by the Domain Name System (DNS) or resolver. It is possible for one computer to have several hostnames (aliases) though one is designated as its canonical name.
It is often possible to guess a hostname for a particular institution. This is useful if you want to know if they operate network services like anonymous FTP, World-Wide Web or finger. First try the institution's name or obvious abbreviations thereof, with the appropriate domain appended, e.g. "mit.edu". If this fails, prepend "ftp." or "www." as appropriate, e.g. "www.data-io.com". You can use the ping command as a quick way to test whether a hostname is valid.
The folklore interest of hostnames stems from the creativity and humour they often display. Interpreting a sitename is not unlike interpreting a vanity licence plate; one has to mentally unpack it, allowing for mono-case and length restrictions and the lack of whitespace. Hacker tradition deprecates dull, institutional-sounding names in favour of punchy, humorous, and clever coinages (except that it is considered appropriate for the official public gateway machine of an organisation to bear the organisation's name or acronym). Mythological references, cartoon characters, animal names, and allusions to SF or fantasy literature are probably the most popular sources for sitenames (in roughly descending order). The obligatory comment is Harris's Lament: "All the good ones are taken!"
Unix manual page: hostname(1).