DNS can be considered something similar to a phone book. When you move from one location to another, your name stays the same, but your phone number may change. In order to point your name to the new phone number, you must contact the telephone service provider so they assign you the new phone number and update all directory information to reflect you as pointing to this new phone number.
In this way, the IP number can be compared to a phone number: When someone calls http://www.example.com/, your ISP looks at the DNS server, and asks "how do I contact example.com?" The DNS server responds: "It can be found at 126.96.36.199". As the Internet understands it, this can be considered the phone number for the server, which houses the http://www.example.com web site.
The DNS records for your domain are kept on your hosting server in the place called DNS zone. When you register a domain by means of the control panel, all DNS records are automatically created for you, but in some rare cases you may need to add custom records to your DNS zone. An example would be when you want all e-mail to be processed by an external mail server rather than by the built-in mail system. However, such user intervention requires knowledge of DNS configuration and clear understanding of what is to be done.