[Exim] "failed to find host name from IP address"

Does "refused relay (host) to <qqq@???> from <xxx@???> H=(LocalHost)
[1.2.3.4] (failed to find host name from IP address)" in my server rejectlog
mean that:

1. My server has no valid rev DNS.

or

2. 1.2.3.4 trying to relay mail through my server has no valid
rev DNS