And it should.
The localhost definition is the ip address for internal software processes to connect to one another and not try going to the outside world. 127.anything isn't even allowed in the outside world.
Unless you know what you're doing with networking it's the only entry that goes in that file.
Yours is fine, leave it be.
When you request a network site - say, androidforums.com - the browser sends a request to the Android services to translate that into the matching ip address.
First, it looks in the /etc/hosts file (that's a shortcut to the actual file at /system/etc/hosts).
When it doesn't find it, it looks through the gateway (your router on wifi or a node assigned by your carrier) for the assigned DNS (domain name system) server and gets the required ip address.
https://en.wikipedia.org/wiki/Domain_Name_System
Your phone's network ip address is not going to show up in any of the tables used to resolve names - your phone already knows its own address, and you're not hosting network services from your phone so no one else needs to look it up.
If you don't have root access in ES, you don't need it and don't need to keep looking.
Whatever problem you're having isn't in the hosts file.
What problem are you having?