The other three configuration lines are easier to explain. For a case like yours, where your system host name is doubtless not in the DNS, you need this. Your ISP's mail server can do a better job of sending mail than your system can, so this is also good. Lastly, you tell Sendmail to accept unresolvable domains, because on a dial-up system such as yours, DNS will not always be available to resolve domains. This is also broken.
All information is provided without warranty of any kind.