It's a neat trick, but it comes with some caveats. For instance, `localhost` often resolves to both 127.0.0.1 and ::1, but `.localhost` is described in RFC2606 as "traditionally been statically defined in host DNS implementations as having an A record pointing to the loop back IP address and is reserved for such use". In other words, your server may be binding to ::1 but your browser may be resolving 127.0.0.1. I'm sure later RFCs rectify the lack of IPv6 addressing, but I wouldn't assume everyone has updated to support those.
Another neat trick to combine with .localhost is using 127.0.0.0/8. There's nothing preventing you from binding server/containers to 127.0.0.2, 127.1.2.3, or 127.254.254.1. Quite useful if you want to run multiple different web servers together.
The RFC treats .localhost as a full TLD. I believe Windows does as well, as does Ubuntu (using default systemd-resolved), but macOS doesn't seem to resolve .localhost by default, necessitating the host file trickery.
Of course, in the early internet, the difference between a TLD and a host name weren't quite as clear as they are right now.
It's a neat trick, but it comes with some caveats. For instance, `localhost` often resolves to both 127.0.0.1 and ::1, but `.localhost` is described in RFC2606 as "traditionally been statically defined in host DNS implementations as having an A record pointing to the loop back IP address and is reserved for such use". In other words, your server may be binding to ::1 but your browser may be resolving 127.0.0.1. I'm sure later RFCs rectify the lack of IPv6 addressing, but I wouldn't assume everyone has updated to support those.
Another neat trick to combine with .localhost is using 127.0.0.0/8. There's nothing preventing you from binding server/containers to 127.0.0.2, 127.1.2.3, or 127.254.254.1. Quite useful if you want to run multiple different web servers together.