Thanks for the input Michele

So in IIS for shared hosting I create an entry which says
when traffic comes to this IP then direct them to this folder(website) based on the domain name. This works regarless of were the DNS details are held, Eircom, Go Daddy ect.

Excuse my lack of the specific technical wording of the above as I just know how to do this and know that it just works on the many occasions we have done it in the past for various projects.

What is the process for Apache?

Why would thse guys feel that they need to create thier own local DNS entry? As you said most control panels should allow you to bypass the need for local DNS.

I expect it is also not good practice to have a competeing DNS entries anyway.