Simple DNS explanation requested!!

I have followed this tutorial "perfect setup for mandriva 2007". And I also installed bind. I know this has something to do with an dns server, but I still don't quite understand it.

I know that an dns server can translate an domain name into an ip adres. So my server is able to do that?? right?

Now in ispconfig I need to configure an primairy dns server and an secundairy.
What do I set there. From my hosting company. Which is gonna host my server. I already got an pri and sec server ip from their servers.

But what is the point having it running on my own system??
Because for now I still have to register domain names at another company and forward them to my servers ip adres.