Lab environment for Active Directory learning without a real DNS

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I am trying to setup a lab type of environment for learning Active directory environment using Virtual machines on HyperV. I am planning to create a VM using Windows 2008 R2 Standard. When I google around on step of setting up Active Directory and Domain controller, one of the requirement is to configure TCP/IP and DNS network configuration. What I am confused about if I don’t have any static IP address or registered domain name (like www.mydomain.com etc), can I still setup DNS and proceed with setting up my lab for AD setup?

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From my experience, DNS is used to resolve hostnames and allow any machines connected to the domain to contact the Domain Controller. Just setup your domain as [Your Domain Name here].local to avoid any conflicts with external domains and you're all set.