If you're asking this question, then you are likely not running your own name server.
At that point, you more than likely will be using the "Set up DNS and Name Servers Automatically". You would then use their DNS zone file function to tell everyone where to find your web server, mail exchanger, etc.
Specifying your own name servers is not naming your own name servers (unless you actually have a DNS server set up for your company, etc.) but telling your registrar that you will be using another set of name servers to manage IP to name resolution for your domain. For example, you decide to host your web server with a web hosting provider that provides web, mail, ftp, etc. You provide them with your domain, they set up a Zone File on your services account, provide you cPanel access to manage your DNS entries. You then will use your hosting provider's name servers in your registrar's settings to point the name services to your hosting provider instead of your domain registrar.
Naming conventions for name servers are along the lines of