127.0.0.1 is a computer's loopback IP address. Actually the whole 127.0.0.1/8 range is allocated for this, but only 127.0.0.1 is normally used. It is usually configured in /etc/hosts to the host name localhost.
If you're troubleshooting local TCP/IP networking issues you can issue a ping 127.0.0.1 or ping localhost command to see if the TCP/IP stack is installed and working on your local machine. If the ping replies, then you have eliminated a missing TCP/IP configuration on the local machine as a possible cause.