All websites on internet has an IP address besides the site name. How does our browser know which IP a site belongs to? The computer will look in a directory called a DNS (Domain Name System) server which has got all the IPs or check the local DNS cache (just like internet history) to find the IP address from a name. But before checking with a DNS server the IP is first checked with you local Host Files.
The cross checking with host file occurs even if you are not connected to the Net. But if you are connected to internet the address is first checked with Host File and then with a DNS server. When you are connected to internet your default setting will let your ISP select the DNS server for you. So the OS goes to the DNS server with a request to resolve the address and return the IP. And when the DNS server returns the IP you are taken to that computer (server).
How can a DNS server protect you from a phishing site? : When you send a request to resolve a Phishers address and the DNS knows it is a phisher, then DNS can prevent you from getting Phished. Thats exactly what the New Open DNS service claims to do. For this you must set your DNS server to be OPEN DNS servers. How to set your DNS to Open DNS servers and Increase browsing speed?