Exim4 under sarge error - remote host address is local host - when sending local mail

["Rich Stanton" <stantonrj@cf.ac.uk>]

I've got a freshly setup sarge box, and have only ever set up sendmail
before - I've got some questions about getting exim4 properly configured.  I
configured it through dpkg-reconfigure, and selected monolithic file,
internet site and nothing else.  Mail setup in this way all comes from
<username>@localhost.localdomain.  In other systems I've used, mail would
come from <username>@FQDN.  I tried adding the FQDN as the answer to the
question 'what is your hostname for outgoing mail' in debconf, however then
messages got frozen with the error 'remote host address is local address.'
I re-ran dpkg-reconfigure and added my FQDN to the list of local addresses,
and mail was delivered fine.  Why do I need to explicitly add my FQDN to the
list of local addresses?  Does this suggest something is wrong somewhere
else?  My hosts file includes this:

127.0.0.1       localhost.localdomain   localhost       d123

(My FQDN is d123.<mydomain.com>).  I had a look at template.exim4.conf, and
found the locadomain section looks like this:

domainlist local_domains = DEBCONFlocal_domainsDEBCONF

Does this mean debconf hasn't finished configuring my file?

Thanks for any help!