Strange problem with adding member to domain

I struggled with this one and finally figured it out but I want to understand what is going on with this network.
Single DC on the network. When I looked at all of the domain members under computer properties, the domain name only reads "local ". I also looked under the active directory on the server and the computer properties of the server and it was listed as "local ". I assumed that someone prior to me had set this up as a single level DNS domain name. So I tried to add a member with "local" as the domain name and it continued to fail.
So eventually I noticed that if I browsed the network on a workstation that was already part of the domain the domain name was actually "DOMAIN ". So I tried to add the member with this name and it worked.
But it still displays as simply "local" when viewed under computer properties, under active directory on the DC, etc.
Why is the FQDN not showing. I expect it to be displayed as "DOMAIN.local "??
Is there a group policy setting that hides this part of the domain name.
All is working fine I just wanted to understand why this is happening?

 

It appears that DNS is not configured correctly.

DOMAIN on its own is a NetBIOS name. When you add a user using this name you bypass DNS and use the NetBIOS set of protocols to connect to the server and authenticate.

To be honest, I'm not sure of the best way of correcting this. AD and DNS are so closely tied, I'm not sure that just configuring DNS correctly will fix the problem.

You could try adding a new primary zone to DNS. It would need to be called domain.local and stored within AD.