The term “custom DNS server” or “private DNS server” refers to the DNS servers that a reseller is using to provide DNS services to his customers. As a reseller a web host does not have his own infrastructure. He is leasing the infrastructure from the actual web host.
As a hosting reseller you do not want your customers to know that you are reselling them web hosting from a somebody else. The concern is that the clients would bypass you and buy web hosting directly from the source to save money. In order to keep your actual infrastructure anonymous you need to remove any connections between you and the real hosting company you are using to provide your services.
Custom DNS servers are used so that a customer uses ns1.YourPrivateDomain.com and ns2.YourPrivateDomain.com for the DNS setting of their domain and not the names of the DNS servers that your host provided you with.
Resellers should use custom DNS servers as an additional step to brand their services and to hide the fact that they are buying hosting from a larger company.
If a reseller web host (a host selling hosting to resellers) does not offer custom DNS servers, a reseller should look somewhere else to buy his hosting from. Nowadays there is no reason why a reseller should not get his own custom DNS servers assigned.
I would recommends Host Gator Reseller, they are one of the best and largest host reseller. Check out their plans.