The Hosts File

Before your machine asks DNS anything, it checks a file on disk: /etc/hosts. Look inside it:

cat /etc/hosts

Each line is an address followed by one or more names for it. The line you will always find is this one:

127.0.0.1    localhost

That is why localhost works with no network and no DNS server at all. The answer is sitting in a file.

The hosts file wins over DNS. Whatever it says is used, and DNS is never consulted for that name. That makes it genuinely useful, for pointing a real domain at a test machine while you work, and it also makes it the first place to look when a name resolves somewhere that makes no sense.

Your file has other lines too, including ones for IPv6 and usually one for the machine's own name, so do not expect it to look identical to anyone else's.