Simply put, this term is the term you use to direct your web browser to look at your own computer.
To understand this, it helps to understand how web browsers work. When you type an address (known as a uniform resource locator or “URL” for short) into your browser, you are telling it to look at a computer at that address. So if you type in “www.example.com” you are directing your computer to look at a certain address on the Internet.
Likewise, if you type “localhost” into your web browser, it will tell your computer to go to the computer you are currently using. You can type in further directions to tell the browser where to look on the computer.
Using “localhost” is typically employed in the venue of website testing and development. A WordPress Developer will use a program such as WordPress to create a site; however, rather than launch it on the Internet, the developer will use the localhost command to view the site from his or her own computer. This allows the developer to see how the website will look and operate once it is actually online.