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Hosts File 

The Hosts file contains the mappings of IP addresses to host names. This file is loaded into memory at startup, then Windows checks the Hosts file before it queries any DNS servers, which enables it to override addresses in the DNS.

You can use the Hosts file to redirect ad network server names to localhost to avoid ads on websites. Another 'feature' of the Hosts file is used by worms. Many of them use that file to redirect all requests to websites of Antivirus companies to localhost to avoid removal of the worm.

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