/etc/hosts clearly states that its only used in single-user mode (press command-s at boot to see how that looks
My question is, how do I create a hosts table that is actually used?
I'd like to map certain domains to a local IP...
Take a look at the darwinfo.org FAQ under the "What are some basic commands to manipulate NetInfo? " heading. Netinfo is a "NIS like" database for users, hosts, etc...