Exporing Login Portal (Control Panel)

I am exploring the options in Login Portal in Control Panel. Overall I understand what it is for, like an alias or port number for applications. I am also familiar with reverse proxy.

For the Domain setting I am still a bit puzzled. For example for File Station you could enter ‘file.example.com’ the help file says. But how do I get this to work? When using this internally I would set up a DNS server. Or externally, set up DNS and port forwarding.
Does it work similar to a reverse proxy server but without the proxy? Is anybody using this and how did you set this up?

Thanks in advance.