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The Hosts file contains the mappings of IP addresses to host names.
This file is loaded into memory (cache) at startup, then Windows checks the
Hosts file before it queries any DNS servers, which enables it to
override addresses in the DNS. This prevents access to the listed
sites by redirecting any connection attempts back to the local
machine. Another feature of the HOSTS file is its ability to block
other applications from connecting to the Internet, providing the
entry exists.
You can use a HOSTS file to block ads, banners, 3rd party Cookies,
3rd party page counters, web bugs,
and even most hijackers.
This is accomplished by blocking the connection(s)
that supplies these little gems.
Example - the following entry 127.0.0.1
ad.doubleclick.net blocks all files supplied by that DoubleClick Server to the web page you are viewing. This also prevents the
server from tracking your movements. Why? ... because in certain cases "Ad
Servers" like Doubleclick (and many others) will try to open a separate connection on the
webpage you are viewing.
For XP SP2 users you should see a Security Center prompt about
allowing this connection.
Simply click No and continue. Yes the prompts can be annoying
but at least you'll know, however you should not see these
prompts if these entries are included in the HOSTS file.
Note: this prompt only occurs if (example) *.doubleclick.net is included in the "Restricted Zone". In summation, spyware, trojan downloaders, malicious exploits, and many other parisites are downloaded through your web browser. The Windows Hosts file will fool your machine into thinking that the blocked site's IP adress is 127.0.0.1 (localhost). When you add sites to a Hosts file you are in essence "blocking those sites from connecting to your machine."
"localhost is where the heart is."
I have made some screenshots of the actual location of the hosts file and examples of how to block malicious web-sites. Click on each image below to navigate the screenshots.
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