>IS it necessary to have the .com etc at the end of the addresses, what is to 
>stop me from just having say 'mydomain' without an extension?

mydomain is not a recognised top domain so the Internet's nameservers
won't be able to resolve the name. It's like deciding to call your
1/4 acre block Knightland and asking your friends to address you at
1 Main Street, Knightland. Nobody in the world knows where Knightland is.

If you are running a totally self-contained intranet or internet
(lowercase), then you can do what you like with domain names, but to
deal with the real world you have to work with the convention.

BYW: Some Web browsers will append .com, .net, etc. as subsequent guesses
so you might sometimes get through with an incomplete domain name.
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