The short answer is your friend is a nit-wit and you don't need a domain for 3 PCs - in fact that's just over the top, and heres why.
Firstly, you do need a server running a server version of Windows (either 2000 or 2003, ignore NT4 with Windows XP workstations). That in itself is quite expensive. What the domain server does is allow you to create user accounts people can login with and configure profiles, home directories and login scripts etc all from one PC. You can then also add group policies to deploy software, restrict access to things and so forth. I'm sure you'll agree, you'll have no need for that and unless you know how to do it, it will take you a fair while to learn how to do it.
If you want to go as far as having a server for something, a basic file server can be done with Windows XP. Setup some shared folders, and created some mapped drives on your PC and you could do everything a domain could do, except you'd have to do it on each PC - not really a problem for 2 or 3 PCs really.
If that makes any sense, you'll quickly see how useful a domain server is in a business with 60 computers. Being able to control each and every one exactly how you want to from one PC is really useful, but in the home not exactly needed.
Basically, stick to what you've got unless you start noticing lag from any wireless PCs in games, and if you do, just wire them into your router. And if you need to share files, stick them on one PC and share them from there - just don't turn it off