"It uses the hosts file to block ads..."
You could also run your own "localhost" DNS to block ads. This is a bit more flexible than the HOSTS file. Even if you are a novice, I believe once you have this setup working, you will never go back to third party DNS such as your ISP or openresolvers like Google, OpenDNS, etc. Just my personal opinion.
By using DNS you can also block ads across all your devices, at least on your home LAN. You use one device to block ads on all your devices by making the one device a gateway for the others. No need to root the devices; just change the gateway in network settings.
It all works beautifully. Maybe someone should do a startup?
It seems like there is real demand for blocking ads and the current solutions leave much to be desired.
On the free side, I can package a working solution on a bootable USB stick, SD card, CD, etc. Or I can make it a userspace kernel, Xen kernel or some other virtualized format for the "container" enthusiasts.
Without expending any effort to reduce size of the bootable kernel the whole thing (with embedded filesystem) weighs in at about 20MB.
Enough configuration has already been done so all you have to do is come up with a spare computer (e.g., old laptop, PC), boot and enjoy the ad free experience.
You can also block google-analytics, mobile apps than phone home, etc. You can stop your Apple devices from being the beacons they are: they phone home to multiple domains constantly 24/7. Running your own DNS also makes redirections easier, e.g., when you are monitoring SSL traffic being sent from apps, etc. The list goes on.
Note I am not denigrating the HOSTS file. I regularly make use of the HOSTS file in tandem with DNS, but not to block ads.