In computer networking, localhost (meaning "this computer") is the standard hostname given to the address of the loopback network interface. The name is also a reserved domain name (RFC 2606) (cf. .localhost), set aside to avoid confusion with the narrower definition as a hostname.
Localhost is specified where one would otherwise use the hostname of a computer. For example, directing a web browser installed on a webserver to http://localhost will display the home page of the web site being served from the computer running the browser, but only if the web server is configured to service the loopback interface.
Communicating with the loopback interface in an identical manner as with a remote computer, but bypassing the local network interface hardware, is useful for the purposes of testing software. Connecting to locally hosted network services (such as game servers) or for other inter-process communications can be performed through localhost addresses in a highly efficient manner.
For example, a common basic test of the TCP/IP protocol stack on a computer is to use the 'ping' command at the operating system's command line prompt:
IETF document "Special-Use IPv4 Addresses" (RFC 3330) describes the IPv4 address block 127.0.0.0/8 as being reserved for loopback. It is therefore excluded from assignment by a Regional Internet Registry or IANA.
For IPv4 communications, the virtual loopback interface of a computer system is normally assigned the address '127.0.0.1' with subnetwork mask '255.0.0.0'. Depending on the specific operating system in use (notably in Linux), and the routing mechanisms installed, this often populates the routing table of the local system with an entry so that packets destined to any address from the '127.0.0.0/8' block would be routed internally to the network loopback device.
In IPv6, on the other hand, the loopback routing prefix ::1/128 consists of only one address ::1 (i.e., 0:0:0:0:0:0:0:1, the address with a one at its least significant bit and zero otherwise) is explicitly defined as an automatic loopback address (RFC 4291), though additional addresses may be assigned to the loopback interface by the host administrator.
Any IP datagram with a source or destination address set to a localhost address must not appear outside of a computing system, or routed by any routing device. Packets received on an interface with destination address of 'localhost' must be dropped.
One notable exception to the use of the 127/8 network addresses is their use in Multiprotocol Label Switching (MPLS) traceroute error detection techniques (RFC 4379) in which their property of not being routable provides a convenient means to avoid delivery of faulty packet to end users.Bron: Wikipedia.org