127.0.0.1 is the standard IP address used for a loopback network connection. This means that if you try to connect to 127.0.0.1, you are immediately looped back to your own machine. 127.0.0.1 is also referred to as “localhost”, meaning ‘this computer’.
If telnet, ftp, etc commands are fired to 127.0.0.1, you would be connected to the very same machine from where the commands are fired. For example, if a system is named “joker”, and an attempt to telnet to 127.0.0.1 is fired, you would see:
# telnet 127.0.0.1
Connected to joker
Escape character is ‘^]’.
127.0.0.1 or localhost is used in place of the hostname of a computer to be connected. Although 127.0.0.1 is the most commonly utilized address for localhost, any IP address in the 127.*.*.* range should also function in the same manner.
Making a connection with a 127.0.0.1 loopback address is the same as making a connection with any remote computer on the network, but avoiding the local network interface hardware. It is widely used by application developers and system administrators with the intention of testing software/applications. For IPv4 connections, the loopback address of a computer machine is usually allocated the address 127.0.0.1 with subnet mask 255.0.0.0.
127.0.0.1 Defined in the Internet RFC’s
The proper use of 127.0.0.1 is defined in RFC 3330: Special-Use IPv4 Addresses:
127.0.0.0/8 – This block is assigned for use as the Internet host loopback address. A datagram sent by a higher level protocol to an address anywhere within this block should loop back inside the host. This is ordinarily implemented using only 127.0.0.1/32 for loopback, but no addresses within this block should ever appear on any network anywhere.