The main purpose of a domain name is to provide symbolic representations, i.e., recognizable names, to mostly numerically addressed Internet resources. This abstraction allows any resource (e.g., website) to be moved to a different physical location in the address topology of the network, globally or locally in an intranet, in effect changing the IP address. This translation from domain names to IP addresses (and vice versa) is accomplished with the global facilities of Domain Name System (DNS).

By allowing the use of unique alphabetical addresses instead of numeric ones, domain names allow Internet users to more easily find and communicate with web sites and any other IP-based communications services. The flexibility of the domain name system allows multiple IP addresses to be assigned to a single domain name, or multiple domain names to be services from a single IP address. This means that one server may have multiple roles (such as hosting multiple independent websites), or that one role can be spread among many servers. One IP address can also be assigned to several servers, as used in anycast networking.

By definition (RFC 1034), domain names are restricted to the ASCII letters a through z (case-insensitive), the digits 0 through 9, and the hyphen, with some other restrictions in terms of name length and position of hyphens. Since this does not allow the use of many characters commonly found in non-English languages, and no multi-byte characters necessary for most Asian languages, the Internationalized domain name (IDN) system has been developed and is now in testing stage with a set of top-level domains established for this purpose.

The underscore character is frequently used to ensure that a domain name is not recognized as a hostname, as with the use of SRV records, for example, although some older systems such as NetBIOS did allow it. To avoid confusion and for other reasons, domain names with underscores in them are sometimes used where hostnames are required.

Domain names are often referred to simply as domains and domain name registrants are frequently referred to as domain owners, although domain name registration with a registrar does not confer any legal ownership of the name, only an exclusive right of use.