Hi, the reasons for the random hostname assignment are both technical and practical...
Technical: the simulator is QUITE sophisticated underneath the hood and timing and synchronization are an issue. For example, if someone "disconnects" from the simulation it's hard to tell why - did they intended to disconnect? is it a temporary (real) internet outage? did the window just lose focus?
For this reason when someone re-joins we assign a new hostname so that at least the current window knows which thread of activity is going on.
--because of this behavior it means that you can open up two windows on one computer to play around with the simulator yourself acting as two different users.
-- it prevents students from randomly guessing hostnames names which helps reduce potential harassment issues (which we saw in some pilot cases). At least a person has to divulge their hostname to someone to get a message from them.
But, no it's not really simulating anything real. You could draw some (very) handwavy analogies to DCHP but...[sucking through teeth].
I think a better message to kids is just to say: "It's simulating the fact that when a computer connects to the internet, it doesn't actually know what's out there without asking, or having other computers identify themselves."