Most products support Loopback Interface to allow client programs and server programs running on the same host to communicate via TCP/IP. The class A network number 127 is reserved for the loopback interface. According to convention, most systems assign the IP address 127.0.0.1 to this interface and name it localhost. An IP datagram sent to the loopback interface cannot appear on any network.
Once the transport layer detects that the destination address is a loopback address, it should be possible to omit part of the transport layer and all the logical operations of the network layer. But most products still complete all the processes of the transport layer and the network layer, but return the IP datagram to itself when it leaves the network layer.