localhost 127.0.0.1

This is probably a stupid question but I’m going to ask it anyway. When I type netstat -a I have an IP entry (127.0.0.1). I’m hoping someone can shead some light one this for me. The only thing I can find online related to it is 127.0.0.1 = localhost.. What the heck does that mean?

Does anyone know what purpose 127.0.0.1 servers or perhaps a location where I can find out more information about it.

Thanks
EBCDIC