Resolving hostnames locally enables the use of hostnames (instead of IP addresses) without relying on a DNS server. If you do not want to use reverse DNS resolving but still would like to use hostnames instead of IP addresses, then this is a useful workaround. The key is to configure syslog-ng to use only the local DNS cache as a source for reverse DNS lookups, completely eliminating the need for a DNS server (and the negative impact this would entail).
Add the hostnames and IP addresses to the local name resolution file /etc/hosts, then reconfigure syslog-ng (by editing the global options in /etc/syslog-ng/syslog-ng.conf) to use DNS resolving but only use the persistent cache (i.e. whateve ...