Also, running your own DNS server means you can do this for every device, even those for which you can't easily access the HOSTS file or perhaps don't even have such a facility (locked-down mobile devices, embedded systems, etc) and not have to worry about keeping multiple copies of HOSTS files in sync and updated.

Although I don't have such devices in my network, I've heard that others do this to their "smart" TV/media box/creepy home surveillance gadgets.