Update documentation

README

@@ -9,4 +9,28 @@ GENERATE
 --------
 
 $ . .venv/bin/activate
-$ ./generate_hosts.py < hosts.in
+$ ./generate_hosts.py < hosts.in > hosts
+
+
+FORMAT OF HOSTS
+---------------
+
+There are 4 types of lines:
+
+- Whitespace
+- Lines starting with # are a comment
+- Lines starting with a ! are copied word-for-word (minues the bang)
+- Other lines are resolved through DNS
+
+EXAMPLE
+-------
+
+* hosts.in
+
+# HOSTS
+!127.0.0.1 localhost
+hostname.csclub.uwaterloo.ca
+
+* hosts
+127.0.0.1 localhost
+129.97.134.111 hostname.csclub.uwaterloo.ca hostname