What is 127.0.0.1?
127.0.0.1 is the standard IP address used for a loopback network connection.

This means that if you try to connect to 127.0.0.1, you are immediately looped back to your own machine.

If you telnet, ftp, etc... to 127.0.0.1, you are connected to your own machine.

In other words, 127.0.0.1 is you.

For example, if your system was named "joker", and you attempted to telnet to 127.0.0.1, you would see:

# telnet 127.0.0.1
Trying 127.0.0.1...
Connected to joker
Escape character is '^]'.
Convincing newbie's to connect to 127.0.0.1 is a frequent joke on the Internet.

Another name for 127.0.0.1 is localhost.

Although 127.0.0.1 is the most commonly utilized address for localhost, any IP address in the 127.*.*.* range should also function in the same manner.