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Why is Microsoft Loopback interface called _loopback_ inteface?

RFC3330 states that a loopback interface is an interface with an IP address in the 127.0.0.0/8 address range.

Yet, when I enter the 127.x.x.x address in Microsoft Loopback TCP/IP settings, Windows returns an error.

What is its purpose?

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I've asked the question because I'm confused what the 'loopback' word actually means. As I understand from the sysadmin1138 s response, the word has many meanings depending on the context the word is used in. I.e. I haven't thought about the IPX protocol. – trismarck Dec 18 '11 at 23:37
Fair enough. I have update the question to make it less.. ranty – Mark Henderson♦ Dec 18 '11 at 23:58
Loopback adapter? thinkgeek.com/gadgets/tools/6c20. You cannot assign any IP addresses to that. – Zoredache Dec 19 '11 at 2:40
One example of real-world use of the Microsoft Loopback Adapter is to establish a virtual network between a virtual machine and the host, without allowing the virtual machine access to the physical network. – Harry Johnston Dec 26 '11 at 3:53
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Because Microsoft is treating it like a loopback physical interface. On _loopback_ you can assign any protocol stack Windows works with, including IPX (up to certain Windows versions) which isn't a TCP/IP protocol at all. The TCP/IP concept of a loopback interfacce is a logical concept, and 127.0.0.0/8 addresses apply to the local machine entirely; I don't believe you can explicitly bind them on any Windows adapter.

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