The /etc/hostname file configures the name of the local system that is set during boot. It should contain a single newline-terminated host name string. The host name may be a free-form string up to 64 characters in length, however it is recommended that it consists only of 7bit ASCII lower-case characters and no spaces or dots, and limits itself to the format allowed for DNS domain name labels, even though this is not a strict requirement.
In Arch Linux the HOSTNAME variable in /etc/rc.conf is checked for the host name as well, however only as fallback.