So I was just going to erase this post since the title is misleading. I have solved the issue and I've decided to keep the question and answer because it seems to have been a problem for others, so I hope it helps out.
The true problem being observed above is a DSN Error, NOT DNS, but DSN. A sendmail DSN or Delivery Status Notification is a function that is part of the sendmail MTA.
What happened is that when I sent mail from my command line I got the DSN error because the hostname was not set in my sendmail.cf file.
I noticed this when I sent mail from another mail client and it went through OK, then I looked further into the sendmail DSN itself.
Adding the following line to my mc file then recompiling it into its corresponding cf file fixed the problem:
define(`confDOMAIN_NAME', `your.domainnamehere.com')dnl