What is the preferred method of command line domain name lookup (DNS)?

nslookup, host, and dig are perfectly good DNS query tools in OS X, but they all query DNS directly rather than going through OS X's internal resolution system. As a result, they don't check the /etc/hosts file, or resolve Bonjour/mDNS names (those ending in .local). The standard (quick 'n dirty) way to test resolution is to use ping, since it'll resolve the address you give it through the usual system before attempting to ping it. If you want something intended for the purpose, use dscacheutil instead:

$ dscacheutil -q host -a name www.apple.com
name: e3191.c.akamaiedge.net
alias: www.apple.com www.isg-apple.com.akadns.net www.apple.com.edgekey.net 
ip_address: 184.24.141.15

$ ping www.apple.com
PING e3191.c.akamaiedge.net (184.24.141.15): 56 data bytes
64 bytes from 184.24.141.15: icmp_seq=0 ttl=57 time=57.258 ms
^C
--- e3191.c.akamaiedge.net ping statistics ---
1 packets transmitted, 1 packets received, 0.0% packet loss
round-trip min/avg/max/stddev = 57.258/57.258/57.258/0.000 ms

Either command works fine. Just because it's not using OS X's methods doesn't mean that it doesn't work. If you want to use "OS X methods" may I recommend Network Utility?

This may still call whois and just display it in the window.