If fncreate is executed on a machine that is an NIS+ client or server, the FNS namespace will be set up in NIS+. (See Solaris Naming Setup and Configuration Guide if you want or need to designate some other machine as an FNS NIS+ master server.)
If the machine is an NIS client, the namespace will be set up in NIS.
If the machine is neither, the namespace will be set up in the machine's /var/fn directory. When your underlying naming system is files-based, the common practice is to create /var/fn by running fncreate on each machine. It is possible however to create /var/fn on one machine and export it by NFS to be mounted by other clients.
# fnselect nis