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. whatever is present in /etc/hosts). The cache file to use is also specified:

options {
        use-dns(persist_only);
        dns-cache-hosts(/etc/hosts);
};

For Debian, this means changing the config variable use-dns from use-dns(no); to use-dns(persist_only); and adding the hosts file variable.