You can have one or two of your servers running DNS for all of your internal devices without connecting to the internet. that is if you want it to only give out DNS information for everything on your LAN. if you have an internet connection you can point all your internal equipment to your internal DNS server for name resolution. If you have an Active Directory network installed you already have this in place.
This second thing a DNS server is typically used for is done by default by most DNS installations and is called a caching DNS server because it uses the <b>root hint</b> servers to resolve “internet addresses”, this is definately true for Microsoft’s DNS services (including the services provided by the domain controller’s DNS server)