From Observium

Why can I only add a device by a valid resolvable hostname?

Because parts of the auto-discovery code and protocol relationship tracking code requires valid hostnames. We made an early architectural decision to make this name the primary identification for a host.

Observium doesn't matter if the name is resolvable via DNS or via /etc/hosts, but it must resolve. It *should* match the hostname the device knows itself as, but no errors will be generated if it doesn't.

Furthermore, for auto-discovery to work properly, the hostname that the device knows itself as *must* be resolvable, again either by DNS or /etc/hosts.

We hope this also helps to mitigate laziness within deployment teams. :)