1: ad-blocking site entries added, cracked apps or related hacks installed, stuff other than localhost added, compare what’s present with a known-good copy, etc. See Fixing a hacked /etc/hosts file - Apple Community —that's missing the FE80 entry that seems to have been added by Apple, but it’ll work.
127.0.0.1 localhost
255.255.255.255 broadcasthost
::1 localhost
fe80::1%lo0 localhost
That’s the IPv4 local host, the broadcast address, the IPv6 local host address within the link local address range, and the IPv6 link local address that’s the rough analog to the IPv6 self-assigned address range, respectively.
2: what about that is confusing, as elaborating on that could help me tailor that for clarity, and avoid re-explaining what you already do understand?
Most folks have what’s often called a network switch around, these are boxes that provide four or eight or more ports for RJ45 network cables, and communications among those ports, and connecting to that box brings up the physical network connection (the yellow and green LEDs that many network ports feature will illuminate, etc), without having a connection to other hosts in an IP network. This is where a host will get a self-assigned IP address, among other details, as there’s no DHCP server here.) This is about the simplest Ethernet network possible, outside of no external connection. This eliminates all external boxes—switches are “transparent” and will mostly look and work like lengths of wire—as potential sources of trouble. It also eliminates Wi-Fi, as that can inherently add boxes into the configuration, usually embedded within the equivalent of the AT&T U-verse box here, in this case.
3: Yes, you can eliminate AT&T here, at least for local traffic. Which is what helps with testing. Divide, and isolate, and localize the errors. There is no need for the ISP involvement for local traffic. That’s what 2 above does. AT&T U-verse features what I’d consider some bad ideas, too, particularly around the local network sniffing they seem to do by default.