Think of setting acme.example.local and foo.example.local in hosts to 127.0.0.1. In my code I have middleware that sniffs the leftmost part of the hostname and authenticates and routes based on that info.
With this I don't need to mess with hosts, and I don't need to worry about putting in a hack for mobile (on which you cannot change any hosts).
Another use case I can see is for testing subdomain-based web apps where you give each customer a subdomain (really just a wildcard dns record), e.g. acme.myapp.com
Yes, you could achieve the same functionality by editing /etc/hosts, but that's a pain in the arse if you're rapidly switching between a set of different sites, or if you want to access a coworker's machine in the same way.
You guys are complaining too much about useful hacker-friendly tools from well-known companies.
No need for DNS or different ports.
Anyway, out of subject.
I guess the 'TLD's shouldn't be polluted' ship has sailed quite some time ago.