Optimally, base the minimum configuration of your system on expected peak load. Typically a configuration running all elements of a system on a single server spends 95% of its time idle and 5% of its time trying to keep pace with the resource demands. If you expect your system to perform an operation that could run create, modify or delete rules on tens or hundreds of thousands of business objects, your real system needs may be higher.
Hostnames can be any length, but the initial eight characters in the names of all hosts used as servers with this application must be unique in the network.
See Single Server Sizing, Sizing for Standalone Installations, and Suggested Hardware for Distributed Installations for more specifics about hardware.