I was setting up a website on DigitalOcean and have messed up because I have modified the etc/hosts file. (That was unnecessary, because I already had setup the nameservers to point to my DO droplet).
Now I don't know how to restore it to default. Also now when I go to the domain name it gets redirected to var/www/html folder instead of var/www/domain.com folder and the URL is rewritten to IP address.
Could you tell us a little more about what you are trying to accomplish? The problems you are describing sound like they could be related to miss-configuring your webserver (i.e. Apache).
But to answer your question... The default /etc/hosts file will look something like this:
127.0.1.1 $fqdn $hostname
127.0.0.1 localhost
# The following lines are desirable for IPv6 capable hosts
::1 ip6-localhost ip6-loopback
fe00::0 ip6-localnet
ff00::0 ip6-mcastprefix
ff02::1 ip6-allnodes
ff02::2 ip6-allrouters
ff02::3 ip6-allhosts
Where if your $fqdn would be foo.example.com then your $hostname would be foo Also, $hostname should match the output of the hostname command.