Must enter Hostname for new dedicated server - Limitations?

I am planning to purchase a dedicated server. However, there is a section where I must enter a "HOSTNAME". They describe it as the following:

Enter Hostname (my.server.com)

My questions are now:

1. What is a 'normal' hostname? is it "server1" or "server1.domain.com"?


2. Do I need a hostname?


3. Can I enter anything I want, e.g. "kangaroo" as hostname?