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Does this serve the same purpose as .in-addr.arpa?

That's for reverse DNS. This is forward DNS. Think of it like a domain that maps to every possible IP address.

I fail to see the difference.

127.0.0.1.in-addr.arpa and 127.0.0.1.backname.io are both domains to IP address, yes? That's "forward dns" in both cases, i think.

in-addr.arpa domains don’t resolve to an IP address, an IP address resolves to them, you can test this with DIG or any dns look up tool

Does it? Try dig any 8.8.8.8.in-addr.arpa you'll get dns.google.com or something. No IP address.