Windows 8 - IE cannot reach sites listed in hosts file

I had the same issue, where we load balance our site across multiple servers, and I try to hit each one individually. What worked for me is going into your Internet Options, and on the Security tab, just remove the checkmark next to "Enable Protected Mode (requires restarting Internet Explorer)" and it should start using your hosts file entries.

I ran into the same problem.

In IE10 and IE11 protected mode is always on by default. Add the URL to the trusted sites at the security tab of Internet Explorer settings.

Also with Windows 8.1, unchecking "Automatically detect settings" at the LAN settings (connection tab) will enable custom entries in the HOSTS file.

In addition to Michael Hompus answer, here is a step by step guide to fix it:
1. In IE, click on gear icon (config) -> Internet Options
2. In the dialog box, click "Security" tab -> "Local intranet" -> click "Sites" button -> click "Advance" button
3. Type in your website, click "Add" button! Then close it and your are done!

This worked for me after upgrading to windows 8.1 and IE 11.