What is the Microsoft Loopback Adapter used for?
Because Microsoft is treating it like a loopback physical interface. On _loopback_ you can assign any protocol stack Windows works with, including IPX (up to certain Windows versions) which isn't a TCP/IP protocol at all. The TCP/IP concept of a loopback interfacce is a logical concept, and 127.0.0.0/8 addresses apply to the local machine entirely; I don't believe you can explicitly bind them on any Windows adapter.