It can be used to re-direct browser inquiries for web sites from say, www.google.com to the IP address 188.8.131.52, which is Yahoo.com.
The Hosts file can also be used to redirect a browser to 127.0.0.1, which is your own computer. In effect a closed loop.
Some more information here;
My computer has been hit with a nasty virus I think that when I type in a tech site or search for a tech site in Google and try and go to it it redirects me to another usually shopping site or it says I have no internet connection or says the site doesn't exist..For some reason this is the only tech site I have been able to get on.I have run numerous virus and spyware programs but nothing has worked so far. My hijack this log shows nothing out of the ordinary. Any suggestions besides reformatting my system? Thanks in advance.