A hostname is a unique name created to identify a machine on a network. In computer networking, a hostname is a label that is assigned to a device connected to a computer network and that is used to identify the device in various forms of electronic communication such as the World Wide Web, e-mail or Usenet. Hostnames may be simple names consisting of a single word or phrase, or they may be structured.
In Funtoo Linux,
/etc/conf.d/hostname is the master configuration file for setting a hostname. In OpenRC framework
/etc/conf.d/foo is the configuration file for a corresponding Init script
/etc/init.d/foo. With the case of hostname, default value is set to localhost, means when system boots and OpenRC's
/etc/init.d/hostname script started a hostname getting only localhost name. How it looks? In your shell promt this will look in following way, an example for root:
localhost # Hello :)