The server's hostname is something.yourdomain.com. It can be whatever you like but usually you would choose something like "server.yourdomain.com".
You can run the "hostname" command while you're logged in via SSH to get the current hostname which you would probably then want to use (assuming it's a FQDN (Fully Qualified Domain Name) - something.something.com).
You don't have to worry about the DNS, WHM will take care of everything related to that.
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hostname is nothing but what you call your server.... you can name it anything you like... most of the people planning to add more servers in future to there network name it as server1.yourdomain.com but if you plan not to install any further servers then you can name it as server.yourdomain.com...