Hi Javini
This is very common in mobile applications due to limited connectivity. The application will connected to the database in network mode. Get a snapshot of it, go the the actual site, no network, could be warehouse or even clinic in the case of doctors, work on the limited data. Then, get into the network mode and perform any synchronisation when necessary.
For desktop and enterprise applications, usually when operate in non-network mode is when some highly secure operations that need to be performed and all other network connections have to be closed so that the operation will not be interfered.
IMHO, loopback networking is used for development
testing. In the real deployment, once the application is deployed, regardless whether is local or remote, the same IP address can be used. Security can be attached to IP address for very secure application and 127.0.0.1 is not acceptable. For example, MYSQL server can config to do that.
Best Regards