You are correct, 127.0.0.1 is your Mac's internal IP. It's the internal IP of every computer in the world. 127.0.0.1 is the "localhost loopback address." It's like the word "me" to a human. Every human is named "me," and every computer is 127.0.0.1.
On a network, computers also have an IP address on the network. On my home network, for example, my PC can't access the web sites on my Mac by using 127.0.0.1, because to the PC, 127.0.0.1 refers to itself. Nor can it use localhost, for the same reason.
So the PC has to use my Mac's internal network IP address. If I recall correctly, 10.0.x.x and 192.168.x.x are the address ranges reserved for internal networks. A router that assigns IPs internally on a network will always use IPs in one of those ranges for internal network addresses, and if you assign your computer's address manually you should always use one of those ranges. I assign all mine manually so that they're fixed. That way I can bookmark my Mac sites on the PC to do site testing easily without worrying about what my Mac's IP address is today. Both the Mac and the PC use my 192.168.x.x. address to access sites on my Mac.
Those addresses are only recognized within your internal network, and the router itself will have a separate, external, IP address on the internet. If you wanted to use your Mac to serve web sites to the outside world using your IP address, for example, you'd have to give people your router's IP address, and then configure the router to forward requests to that address to your computer.
So if my PC is 192.168.0.1 and my Mac is 192.168.0.2, my PC can reach sites on my Mac by using 192.168.0.2. But no one outside my network can reach any of my computers by using a 192.168.x.x. IP. (Edited for clarity.)
So 192.168.0.2 would also be my computer's internal IP address, and is what I'm referring to when I say "and your computer's internal IP." If your Mac isn't networked at all, you might not have any IP besides 127.0.0.1, though.
That's probably more information than you wanted to know, but it might matter here. In my testing, Classic Netscape would only reach sites on my Mac when I used my 192.168.x.x. address. Both localhost and 127.0.0.1 failed with Netscape. Only the 192.168.x.x address worked at all on Netscape.
It's been so long since I've had a non-networked computer I'm not sure how internal IPs work when you're not on a network. You could go into System Preferences -> Network, click the TCP/IP tab, and see what it says in the IP Address field. If there's something there, that should be your computer's internal IP address, and you could try using that address in Classic Netscape.
I'm totally unknowledgeable about how IPs work between Classic and OSX on the same computer. I only know that I can launch Classic and access external web sites without a problem from any Classic browser. Classic Exploder had no trouble reaching any of my Mac sites by using any of the three addresses. Classic Netscape seemed to like the 192.168.x.x. address, and failed totally with both localhost and 127.0.0.1. So if your computer behaves like mine, you might have to use your computer's internal (non-127.0.0.1) address to access your local sites with Netscape.