[VE][323] after host in system identifier wasn't found

http://hmdmhdfmhdjmzdtjmzdtzktdkztdjz.googlepages.com/IDN-XML-test.htm

Hi, what's error [323]: "DTD did not contain element declaration for
document type name" supposed to mean after the validator didn't find
the host where the DTD is stored ?

Wouldn't it be clearer to simply give up after error [2304] "host ...
not found" ?  Does the validator try to continue with an empty DTD ?

 Frank