That doesn't stop anyone using IP addresses directly, and I find that a small minority does (but that minority does including, e.g. Microsoft for some Win10 updates).

Depending on your threat model, you might need to go the proxy/firewall route.

Hosts file is a weird middle ground - that has to be installed and maintained on every device, many of which (e.g. iphone/ipad) won't let you do that. It's better to set up a local DNS, which will serve every local machine; and as I mentioned, doing this at a firewall level is better yet.