Active Directory / Domain Adavantages?

I currently run a home network with 6 pcs, one being a server which serves files and printers locally via a workgroup. the server is running Win2k Server while the other pc's are running XP Pro. What I basically want to know is what are the advantage of switching to a domain? And how is it exactly done? Can I run a DNS server on the server in my network and then just register a domain with that server address?
Any help is greatly appreciated!

Thanks!

to install active directory go to start - run - type in dcpromo

you should be able to name your domain whatever you want and use it locally. i dont think a registrar is needed, but i could be wrong. im new to this stuff. and yes, you can run DNS on the same server. in fact, i was told that AD would/could not run w/o DNS.