Hello Dawei,
When you set a cluster name, you can allow (for example) your users to login to the CMC using @BI-PROD instead of BXY.PROD1.XYZ.COM:6400 (example above). (You don't want them to know every CMS server name on your Platform)
This cluster name does not need to be a valid dns entry, for example, on Windows, this is stored in a registry key.
Regards,
Matthieu