127.0.0.1

127.0.0.1 is the IP address for "localhost". Localhost is the standard loopback address. If one were to connect to 127.0.0.1, they would be making a connection with their own machine. If running a game server, connecting to 127.0.0.1 is a simple way to be able to connect to your own server efficiently. You may also connect to this address to access a web server you may be running. However, the majority of the time 127.0.0.1 is used is for testing purposes. Because 127.0.0.1 is defined as the local address by TCP/IP, no other address may use this particular IP.

Because 127.0.0.1 routes back to the own user's machine, this has been used as a prank to be played on people unfamiliar with with address. People will either fool one in to trying to connect to this address, or telling them to try and hack into it.

How this loopback may be used in testing

You may test the functionality of your network card by pinging the localhost. This will test to see if the packets are being delivered correctly and if all of your TCP/IP setting are correct, as well as seeing if the hardware is working. Below are detailed instructions on how to ping 127.0.0.1

Windows

On the task bar, click Start -> Run
When the prompt comes up to type a command, type in "cmd" (minus the quotes)
This will bring up your command prompt.
Once the prompt is up and ready to go, type in "ping 127.0.0.1"
If everything is working correctly, you should see a status that looks somewhat like this:

Pinging 127.0.0.1 with 32 bytes of data:

Reply from 127.0.0.1: bytes = 32 time<1ms TTL=64 (x 4)

Ping statistics for 127.0.0.1:
Packets: sent = 4, Received = 4, Lost = 0 <0% loss>
Approximate round trip time in milli-seconds:
Minimum = 0ms, Maximum = 0ms, Average = 0ms

Mac

Open up the Finder in the dock
Click on your Mac hard drive (Macintosh HD)
Click Applications -> Utilities
Open up the Network Utility
Once in the Network Utility, open up the "Ping" tab
In the "Please enter a network address to ping" field, type in 127.0.0.1, then click Ping

Linux

Simply just open up a terminal, and type ping 127.0.0.1
To end the ping (it will continue to ping until you tell it to quit), press ctrl+c
A summary will be displayed, and it will probably look something like this:

--- 127.0.0.1 ping statistics ---
1 packets transmitted, 1 received, 0% packet loss, time 0ms
rtt min/avg/max/mdev = 0.267/0.267/0.267/0.000 ms

All in all, localhost is quite a simple concept once you understand what it does. Just remember to steer clear of any pranks involving this address that may come your way.