Today I Learned about dnsmasq
Dnsmasq is a lightweight, easy to configure DNS forwarder and DHCP server. It is designed to provide DNS and, optionally, DHCP, to a small network. It can serve the names of local machines which are not in the global DNS. The DHCP server integrates with the DNS server and allows machines with DHCP-allocated addresses to appear in the DNS with names configured either in each host or in a central configuration file. Dnsmasq supports static and dynamic DHCP leases and BOOTP/TFTP/PXE for network booting of diskless machines.
Dnsmasq is targeted at home networks using NAT and connected to the internet via a modem, cable-modem or ADSL connection but would be a good choice for any smallish network (up to 1000 clients is known to work) where low resource use and ease of configuration are important.
So far dnsmasq has come in real handy for multivm, host-only, networks of virtual machines. It seems to cleanly handle reverse DNS lookups and is nicely packaged for most distros.