After launching your hosting service, it will take you to the page where you see the applications and tools, etc. at the top of that section is a menu. Hover your mouse over the "databases" menu and another menu will display "mysql". Click this. It will open a popup window which shows your current databases. Chances are good that there are none there. Either way, you will choose to create a new database. Give it a unique name and assign a password (at least 6 characters, capital, number, special character). Just click to create and wait a few minutes. After a few minutes, the new database has been created and you will see options to the right of the same popout box. Click the button that says "action", then click "details".
This displays your database information. At the very bottom is: Hostname. Copy that entire hostname (highlight then right-click, or highlight + CTRL+C)
Now, begin to repeat the steps that led you to the error to start with. Click install, When you get to the page where it asks for hostname, the given value is "localhost". CHANG THIS TO THE NEW HOST NAME YOU COPIED. (CTRL + V, OR right click and paste). This is the proper host name that will allow installation. Then remember the database name and the password you used to create it? Enter those next. Leave the prefix as is, and do not expand the details at the bottom to create the db... you have already created it. Continue to install as you would expect to do.
You must have the correct hostname for your database, otherwise it doesn't even know where to find your database.
-Good Luck