The Loopback device (aka Locahost) is mapped to the whole range of 127.0.0.0 to 127.255.255.255, which is why it 127.0.0.222 works:
The most commonly used IP address on the loopback device is 127.0.0.1 for IPv4, although any address in the range 127.0.0.0 to 127.255.255.255 is mapped to it.
Update
See this article on host name resolution (specific to 2003, but should apply to XP).
Possibilities:
- Your DNS server is responding with
localhost for any 127.* query (unlikely)
- The entry is still cached (
ipconfig /flushdns to clear it out)
- You may have an
lmhosts file that maps it
I have seen that the default networks file in windows contain loopback 127, which may be why this works.
It is also quite possible that the mapping loopback / localhost is built into the TCP/IP stack itself.