I've tried changing the order of the lines in /etc/hosts - doesn't make any difference

I couldn't find any information on how to configure the in-built firewall.

I've set the security level to medium.
Trusted devices: enabled etho (not sure what this means)

does the file /etc/sysconfig/iptables have anything to do with accessing web-pages served by machines within the network?

Well, it should. Iptables is the firewalling implementation. Turn it off and try again.