It is always so entertaining to see the exact questions that I had when I was starting my Cisco Certification pursuits. First off – congratulations in your choice to study this material – and thank you for reading my blog!!! please consider posting feedback and questions in the comments section. Every question and every comment is responded to promptly.
Now on to the question….
Why do we have the Loopback address and why is it 127.0.0.1??? Early on when the Department of Defense in the US was designing TCP/IP, they decided that they should reserve a portion of the space for testing. They rather randomly selected the 127 space for this purpose. In fact – it is the entire space 127 space that they reserved. Many do not realize this, since the most common implementation is to assign 127.0.0.1. So try pinging the address 127.1.2.3 on your PC and it might just respond if your vendor supports testing with other numbers in the reserved loopback space.
What is the fact that your machine responds to 127.0.0.1 really telling you??? This is telling you that TCP/IP is properly initialized on your device. You might not have external interfaces set up properly,but the TCP/IP stack is indeed there and it is functional once you do the remaining required configurations.
Notice the creators of TCP/IP had no idea there would be an IP address shortage when they selected this space! They sure wasted a lot of addresses for this testing purpose.
Remember also that you can create your own loopback interfaces on Cisco devices. For example, you can do this:
interface loopback 101 ip address 10.10.10.1 255.255.255.0
This creates a virtual interface on your device that you can use for a wide variety of purposes – like testing a feature!