Or, indeed, to assume (as I did for many years) that only 127.0.0.1 itself is a valid loopback address. I was rather surprised when I looked it up and found that it was the entire 127 block.

I use multiple addresses in this block for local DNS servers, both authoritative and recursive, and various local proxies. Alternatively I can clone tap devices and assign them RFC 1918 addresses. However the loopback works better in my experience.

As an end user, I use /etc/hosts not only as a substitute for DNS but also in addition to it.

For example I may block/redirect a mostly noxious domain via wildcard in a customized root zone file on computer1 (an "authoritative nameserver" for a "recursive cache" that serves computer2) but then edit the HOSTS file on computer2 to make an impromptu single exception for a particular subdomain. Ideally I would prefer to run local DNS and local proxies on computer2 like computer1, but with many of today's "computers" this is infeasible; so computer2 might use computer1 for name lookups, routing, etc., as suggested by another commenter.

There are other ways to make these adjustments but editing a text file that is always present and in the same location is quick and dirty, immediate and particularly easy. This is only one use. HOSTS is quite useful in a variety of situations.

IMHO, the use of local computer1 as a gateway/server for another such as local computer2 only becomes even more important as we see a rise in "computers" that are resistant to manual control by the end user, such as those mentioned by another commenter.

Without having the ability to do IP forwarding, packet filtering, run localhost DNS servers and localhost proxies, as an end user I would struggle to control the internet traffic[1] of many of today's "computers" where the manufacturers have preconfigured them to serve their own interests and attempted to lock users out from making changes.

1. e.g., ad blocking, disabling incessant phone home behavior and other bandwidth conservation measures

In short, I need to be able to control the address for "localhost" without relying on or having to worry about DNS. HOSTS achieves that without the complexity and politics of DNS.

This can be useful for testing - especially before one could safely assume SNI support - but also for setting up various Web (or other network) servers locally - with an entry in /etc/hosts (so dev-local can point to some other local ip than test-local) etc.