assing a DNS record to 127.0.0.1

I joined a new company to work on a NodeJs application, and I was surprised to see that the instruction for developers is running locally on their machine and access the web application as something similar to that : dev.mycompanyname.com

I couldn't understand it, specially I didn't change the etc\hosts file to add that entry to point to 127.0.0.1

But when I pinged that site, I found it is pointing to 127.0.0.1.

So, the lead developer created a DNS record and pointed to 127.0.0.1.

So, is that ok? and what the benefits of using that over change my etc\hosts file?