First, you're absolutely correct that people should not just choose random TLDs and attempt to use them. But I think you misunderstand me: I'm talking about doing purely internal DNS for things in private IP space that will never touch the internet. IP space that will never be announced to BGP peers and is thoroughly firewalled off from the Internet.
Let's say I have an ISP named Burrito Corporation.
I want to uniquely address equipment in my private management IP space VRF and have a proper hostname for every piece of equipment, both for "forward" and rDNS.
It's a pretty common setup to have internal BIND servers which are authoritative master/slave for the TLD .burritocorp , which also have an ACL allowing the internal IP space (10/8, etc) to query them. Then set up all internal DNS stub resolvers/client devices to query those servers.
Now I have a core POP in Toronto and I've decided to use airport codes for site names, so the internal management IP interfaces for things at that site might get a hostname which is hierarchically contained under yyz01.ca.burritocorp
It is unlikely in the extreme that ICANN is ever going to create a TLD named "burritocorp".
I am not suggesting that people go and try to use self-created TLDs for things that have real world IPs in the global BGP4 routing table. See section 6.1 of RFC6761.