The Domain Name System (DNS) is just a way to name your equipment so you don't need to address everything by IP. Most applications can use both DNS and IP, so the answer depends on preference. If you don't mind accessing things by IP address, then it doesn't matter. If you need to access everything by DNS name, then you need to have a DNS record associated to the IP address.

For more information, please check the below link:
http://uw714doc.sco.com/en/NET_tcpip/dnsN.main.html

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DNS server is not required though if you want to manually administer using HOSTS files. This will also map IP addresses to host names but is configured on each device and can be difficult to maintain. That is why they came up with DNS services. The name to IP matching is done in one place then and devices query the DNS server for either name based on IP or the IP based on hostname.

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