There are advantages to each option so the answer will depend on your specific requirements.
Adding systems by their DNS name is generally easier and more descriptive. However, there is a chance that these systems will incorrectly show as down in the event of a DNS failure. This scenario may be desirable as it could accurately reflect your users' ability to access these systems.
To avoid a DNS failure causing mass email alerts, we recommend adding your DNS server to Uptime Infrastructure Monitor with a high-level topological dependency for your other hosts so that if the DNS server goes down, other systems will move to an UNKN state instead of sending alerts.
Adding elements by their IP address removes the DNS risk and dependency but can be cumbersome to maintain.