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Reason #2 really isn't a good one. It's pretty simple to setup subdomains locally (just use your hosts file to configure something like dev.whatever.yourdomain.com to point to localhost). Every webserver I know of supports name based virtualhosts, so it's not even like you need multiple IP's

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you cant use wildcards within your hosts file, so you have to manually edit your hosts file for every new subdomain you want to use, I have had a huge hassle doing the same. particularly when you want 1. dynamically generated sub domains, 2. to test a lot of subdomains.

Unless you want to run bind of course

just have your regular DNS use localhost as a wildcard subdomain, say *.development.mysite.com

lvh.me domain is pointed to 127.0.0.1 so you can use subdomains if you're connected to the internet.

I think its pretty important for most people development setups to work offline

Well, then setup bind. It's not the end of the world :). That, or just use /etc/hosts, it's more of a pain, but for testing you just need a handful of URLs.

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