What Nergal said!
Also a HOSTS file can block malicious sites.
Nice, I forgot there was malicious site blocking too, that's a major reason for keeping it updated, so I'm glad you caught that omission.
An advanced answer can also include that you can name home servers in your local network too
Ex placing the line
10.10.10.15 pc3
will allow you to acess the computer called "pc3" at the address 10.10.10.15 (let's pretend it's a local server you use ro play music from) by typing pc3 into the browser's address bar.
network routing from what I understand was actually the original intent of the hosts file. Everything else is incidental