How does the Domain Mapping plugin work..?

Howdy doodly,

While I research and ask hosts what services they can offer re, hdd space, data allowance and dedicated ip’s etc, I have been told a number of times that I will still need to park or add on the domain that is mapped.

“On a server level our server needs to know where to point a domain name once it hits our server.”

Can someone please explain why this is not needed to be done using the domain mapping plugin when using a dedicated IP, as I was asleep during that class and cant find/figure out the answer.

I know it works as the forums tell me so, but I cant just tell them “it just does” and don’t really want to move my site and find it doesn’t work cause I chose the wrong host.