Regarding DNS: When you create a domain controller on your server, it also installs the DNS role. When computers in your network want to find other computers (lets say, for example, tomshardware.com) they have to request the IP address for that name from a Domain Name Services (DNS) server. Your domain controller is now your local DNS, and will resolve computer names within your network. However, just setting up the role on your server doesn't mean your other client computers in the network know that that server is there for DNS resolution.
So, you previously stated that you set up your domain controller/DNS server with the LAN IP address of 192.168.0.1 There are two ways of having your client computers look to this computer IP address then for DNS resolution. The first is with a static IP address. In Windows while you are setting up a static IP address there are the two fields there, Primary DNS and Secondary DNS. Be sure that for Primary DNS you enter 192.168.0.1. The other option is with DHCP. Whichever device you set up DHCP on (whether it is your server or your router) be sure that it hands out 192.168.0.1 as the IP address of your primary DNS server.
On your actual domain controller/DNS server you noticed that the IP address for Primary DNS changed to 127.0.0.1 This is correct, this special address is called the loopback and is basically just telling the computer to look at itself for the DNS server.
Now about Hyper-V: Hyper-V is just the Windows implementation of a broad technology called virtualization. The idea here is that you can take the physical hardware of a server and abstract it, running multiple virtual computers on that hardware which don't care what the underlying hardware is. Think of it this way. If you wanted to create a server for each role in your network (such as one for a domain controller, one for a specific application, another for a print server, and yet another for a backup system, perhaps even another for a camera system.) Traditionally they would purchase one physical system for each of these tasks which really ate up budget as well as requiring more complexity, networking, more systems to manage, more possible failures, more power draw, etc.
With virtualization you can create each of these roles in a virtual machine and run it all on one physical server. These virtual computers are independent of one another so you can manage them individually, taking one offline without affecting the others, adjust settings or even add resources to individual virtual machines on the fly without having to completely shut down your whole system. Where virtualization really becomes handy for small businesses though is fault tolerance. Since virtual machines utilize specialized drivers and have the underlying hardware abstracted from them, it doesn't really matter what hardware they run on.
Let's just look at an example here. Let's say that you start off with your whole network, all your services, running on the physical server with a new Dell PowerEdge server. For three years you run that server, daily, installing all of your things to it, storing all of your data to it, and then suddenly one day the server refuses to power on. Luckily for you you have been creating disk image backups of your data though! But wait, if you want to just transfer those images to another computer, you have to have the exact same physical hardware as your original server, or it may very well not boot or operate properly! It's been three years, and now that server isn't available for purchase. So instead you are left to purchasing a new server and reinstalling and setting up all of your software and information from scratch.
Now, with virtualization, if that same scenario were to happen, you could simply copy the virtual machine files (the virtual hard drive for each virtual machine stores all the data of that VM) to any other computer, regardless of the hardware type, running Windows Server 2012 or Windows 8 Pro with Hyper-V, start it up, and you are up and going again with very little down time.