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Nat Loopback

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I guess you are talking about a static DNS entry for a local server. If this is what you are talking about then it allows you to have a local DNS name on your network. You don’t have to use the local private IP address for access to your server when you are local. It is just an easy way to access a server by name instead of by IP address. You may have a server setup to the outside world know as Myserver. Take for example, you are at work and do a DNS lookup for Myserver which you have exposed to the internet through your router, the outside IP address on the internet will resolve Myserver. When you are local on your private network the outside IP address does not work. So you set a static local DNS entry which will resolve to the real private IP address that is assigned to the server.

Looking back this seems complicated but it is very simple once understand it and it only allows you to access the device by name.
 
You host a web server on a private IP behind the router, let's say www.domain.org
You forward port 80 to the local IP.
When you try to access www.domain.org from outside your network, it works.
When you try to access www.domain.org from within your network, without NAT loopback, you will not be able to. Your request will "go outside" your local network (so to speak) and back again, creating a sort of feedback loop, never being able to reach the destination.
When you try to access www.domain.org from within your network, with NAT loopback, your request will be directed straight to the local IP, without going outside your network.
 
I always heard it called hairpin NAT
 

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