One problem with this approach is that the first time you access the internet using your browser there is a huge lag as the host file is read and cached. Also,

One problem with this approach is that the first time you access the internet using your browser there is a huge lag as the host file is read and cached. Also, you have to increase the default cache size for the host file or Windows has to constantly reread the cache file (causing web page load delays) because its too big to fit in the memory reserved for the cache.