A DNS server resolves domain names into IP addresses. So when you request “yahoo.com” for example, the DNS server finds out the address for the domain, and sends your request the right way.
You can run a DNS cache on your computer. This will speed up the process of looking up domain names when browsing. The difference is about 30-60 ms. Multiply that difference by the number of websites you visit a day for an approximate estimate of the speed improvement.
The following instructions are for someone with a broadband internet connection, where the computer gets it’s local IP address using DHCP from the router in your home or office.