If you want to make up a lookup zone that's just fine. I'm not saying you HAVE to leave it blank! But there's no point in assigning a lookup domain to everything if you're using the built in system as it doesn't go outside to look anyway. If you had a device called "NAS1" you should be able to...
ASUS RT-N66U - 376.45
I currently use a separate local DNS server that forwards any non FQDN items to an external DNS. I am using the option under LAN for "Forward local domain queries to upstream DNS" and this works great for everything I do except for my guest network.
My guest network is...
The domain name part is what lookup zone the router places your clients in. If you aren't really part of a domain then this should be blank. If you have a local DNS server that is not in a domain you would put your DNS servers lookup zone in the box.
For example, I have a local DNS server...