Distributed Network Names (DNNs) are a relatively new Windows Server Failover Cluster (WSFC) concept. Up in Azure, DNNs effectively eliminate the need for an internal load balancer (ILB). The ILB allows applications and end users to be able to connect to an AG’s listener or the FCI after failing over to another Iaas VM. You should not really be using DNNs for any on premises deployments.
DNNs are supported as of SQL Server 2019 CU2 and require Windows Server 2016 or later. I wrote more about them in my blog post Configure a WSFC in Azure with Windows Server 2019 for AGs and FCIs. Go there if you want to see what they look like and learn more.
Right now, I cannot wholeheartedly recommend the use of DNNs for listeners or FCIs if you are using Enterprise Edition. Why?
DNNs do not work with a distributed AG which is an Enterprise Edition only feature. A distributed AG is something nearly many customers who have Enterprise Edition implement either for disaster recovery andor migration. If you want to use a distributed AG, you will need an ILB for the underlying AGs and/or FCIs. As far as I know, this is not officially documented anywhere on Microsoft’s site. I did confirm this limitation of DNNs with them.
If you use Standard Edition or think you will never use a distributed AG, you can use a DNN for AGs and FCIs in Azure. For D/R across regions (or on premises to Azure), that means deploying a stretched WSFC which is inherently a more complex architecture or using something like log shipping.
If anything changes, I’ll be sure to update this blog post.
In the meantime, if you would like Microsoft to add support for distributed AGs with DNNs, go add your vote over at Uservoice.