The search engine pointed me to read the Debian reference which pointed to a Debian bug #719621 in debian-reference package (sorry, url bbcode not allowed) which, in turn, pointed to Debian bug #316099 in netcfg package...
Not friendly at all :-P
Well, it does mention that it is needed for software (they specifically mention GNOME) that expect to find resources on the local machine but have no permanent internet connection and might not be able to resolve the host name. Since local services actually listen to all 127.0.0.0/8 range, trying to connect to 127.0.1.1 will succeed.
I am still confused about all this, maybe because I've been living without that line in /etc/hosts with no perceived misbehavior.