ping: unknown host testserver.company.local
Trying to lookup the FQDN with nslookup works just fine! Strange!
Now it appears that the reason is something called a MDNS (Multicast DNS) which kicks in and handles (by default) all .local domains. Looking at the file /etc/nsswitch.conf I found a line that looks like this:
hosts: files mdns4_minimal [NOTFOUND=return] dns mdns4
Apparently the '.local' extension is not sent to the DNS server for resolution if the MDNS system cant resolve it. So I went ahead and changed the line to:
hosts: files mdns4_minimal dns mdns4
I went back to the shell and ran ping testserver.company.local again, and lo-and-behold it works!
- Ubuntu 10.10 Desktop