You need to set the domain as the permalink of the root Blog or Site.
So if you jump into the admin area, and you're running of the default fixtures, you should find a root level blog with a permalink "localhost:8080". That is the domain pointer you need to edit.
So some examples of URI and permalink combinations might be:
URI -> Permalink
We're keeping up a fairly rapid pace on development. The latest release marks a big point for us here- a huge of stabilising went into 0.2.0.
We intend in the next 0.3.0 within approx. 2 weeks. We are hard at work on the next set of improvements and upgrades.
In the mean time - it's by hearing feedback from people such as yourself - complaints, queries, suggestion, bugs - that allows us to expedite the development process.
Thanks,
Piers