.local already does this
Best to avoid it for that purpose:
1. "Using '.local' as a private top-level domain conflicts with Multicast DNS and may cause problems for users." https://www.rfc-editor.org/rfc/rfc6762#appendix-G
2. ".local has since been designated for use in link-local networking, in applications of multicast DNS (mDNS) and zero-configuration networking (zeroconf) so that DNS service may be established without local installations of conventional DNS infrastructure on local area networks." https://en.wikipedia.org/wiki/.local
3. "PSA: Don't use domain.local" https://old.reddit.com/r/sysadmin/comments/a9sfks/psa_dont_u...
4. "Why using .local as your domain name extension is a BAD idea!" https://community.veeam.com/blogs-and-podcasts-57/why-using-...
For a simple home network setup, as long as naming conflicts can be managed, it looks like mDNS is quite handy.
On a side note, I find .local to be best suited for the purpose, since from the language perspective it's easier on international users than .localhost
The newly proposed .internal comes close, but .local still looks more semantically flexible or maybe this is a cognitive bias of mine.