It’s pretty neat (and does pretty much what you’d expect). I think it might not be documented thoroughly as it’s one of our newer features.
You can register a domain with fly from the command line using “fly domains register <domain-name>”, and add one you’ve registered elsewhere to use our nameservers in much the same way.
With fly dns-records, you can import the records you want from a file, or export them to a file.
Of course, you can also use your own DNS provider-- our custom domains guide touches on this a bit.