Do Python for loops work by reference?

No, variables in Python are not pointers.

They refer to objects on a heap instead, and assigning to a variable doesn't change the referenced object, but the variable. Variables and objects are like labels tied to balloons; assignment reties the label to a different balloon instead.

See this previous answer of mine to explore that idea of balloons and labels a bit more.

That said, some object types implement specific in-place addition behaviour. If the object is mutable (the balloon itself can change), then an in-place add could be interpreted as a mutation instead of an assignment.

So, for integers, item += 1 is really the same as item = item + 1 because integers are immutable. You have to create a new integer object and tie the item label to that new object.

Lists on the other hand, are mutable and lst += [other, items] is implemented as a lst.__iadd__([other, items]) and that changes the lst balloon itself. An assignment still takes place, but it is a reassigment of the same object, as the .__iadd__() method simply returns self instead of a new object. We end up re-tying the label to the same balloon.

The loop simply gives you a reference to the next item in the list on each iteration. It does not let you change the original list itself (that's just another set of balloon labels); instead it gives you a new label to each of the items contained.

Well, it really depends on the items.

Take the following case:

class test():
    pass

a = test()
a.value = 1

b = test()
b.value = 2

l = [a,b]

for item in l:
    item.value += 1

for item in l:
    print item.value

>>> 
2
3

and in this case:

l2 = [1,2,3]

for item in l2:
    item += 1

for item in l2:
    print item

>>> 
1
2
3

So as you can see, you need to understand the pointers as Martijn said.