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In case you do not know, 127.0.0.1 is a special purpose IP address. It is the loop back IP address. It bypasses the network interface hardware and resolves to the localhost. In other words, this IP address is the address of your computer. I am sure you can browse what is on the loopback IP address. It is provided so that you can test our things with a real IP address that does not actually go out to the network. It is just an IP address which is your machine.
With the advent of IPV6, 127.0.0.1 is no longer valid. But the joke still packs a punch for those who know. Besides it does not sound cool to say my IP address is 0:0:0:0:0:0:0:1. It just does not have a nice ring to it. Plus the dummies who are posing as hackers (aka script kiddies) might not even recognize this as an IPV6 address.
The good thing about this magic number is not that it weeds out fakers who know nothing about TCP/IP. The good thing is that is helps you find people who might actually want to talk a little shop talk. Chance are if somebody laughs and knows what the loopback IP address is, they also know a good deal about other interesting technology. Now when you are chatting online you might not want to identify and chat up some other nerds. But then again, sometimes you may just want to easily see who else is wearing a black of hat.