I imagine they use it in much the same way as any enterprise. Running servers and workstations, mostly.
F16's run Kubenetes clusters.
Lots of individual bits of hardware on specialized devices will be running embedded operating systems. QNX is big in automotive for the same reasons it'd work on a rocket.
Run your own DNS server on your network, such as Unbound or pihole. Setup the overrides so that domain.example.lan resolves to a local IP. Set your upstream DNS to something like 1.1.1.1 to resolve everything else. Set your DHCP to give out the IP of the DNS server so clients will use it
You don't need to add block lists if you don't want.
You can also run a reverse proxy on your lan and configure your DNS so that service1.example.lan and service2.example.lan both point to the same IP. The reverse proxy then redirects the request based on the requested domain name, whether that's on a separate server or on the same server on a different port.