How does reverse DNS work?

Reverse DNS lookups query DNS servers for a PTR (pointer) record; if the server does not have a PTR record, it cannot resolve a reverse lookup. PTR records store IP addresses with their segments reversed, and they append ".in-addr.arpa" to that. For example if a domain has an IP address of 192.0.2.1, the PTR record will store the domain's information under 1.2.0.192.in-addr.arpa.

In IPv6, the latest version of the Internet Protocol, PTR records are stored within the ".ip6.arpa" domain instead of ".in-addr.arpa."

What are reverse DNS lookups used for?

Reverse lookups are commonly used by email servers. Email servers check and see if an email message came from a valid server before bringing it onto their network. Many email servers will reject messages from any server that does not support reverse lookups or from a server that is highly unlikely to be legitimate. Spammers often use IP addresses from hijacked machines, which means there will be no PTR record. Or, they may use dynamically assigned IP addresses that lead to server domains with highly generic names.

Logging software also employs reverse lookups in order to provide users with human-readable domains in their log data, as opposed to a bunch of numeric IP addresses.