Internal DNS inside Amazon AWS VPC
It seems from the AWS VPC documentation that the recommended approach to leveraging a DNS server inside of an AWS VPC is to first create a DHCP Options Set and associate it with the VPC. Then you can stand up 1-4 DNS servers in that VPC. Additionally, the DHCP Options Set will allow you to setup the following for all contained VPC instances. (snipped from the docs)
DHCP Option Name | Description domain-name | A domain name of your choice (for example, example.com). domain-name-servers | The IP address of a domain name server. ntp-servers | The IP address of a Network Time Protocol (NTP) server. netbios-name-servers | The IP address of a NetBIOS name server. netbios-node-type | The NetBIOS node type (1, 2, 4, or 8).
Instances should register their DNS names with your DNS servers via DDNS when they start (as CNAMEs to their public AWS-assigned FQDN); that way you can refer to them by well-known name and get the most appropriate address (internal or external) regardless of where you are. Route53 probably has this sort of magic built-in, but I prefer provider-independent solutions where possible.
Wouldn't something like Avahi work? This is even installed and nicely packaged for most Linux distributions. Just give each instance that needs to be reachable a unique hostname, and Bob's your uncle.