On modern computer systems, localhost as a hostname translates to an IPv4 address in the 127.0.0.0/8 (loopback) net block, usually 127.0.0.1, or ::1 in IPv6.
The only difference is that it would be looking up in the DNS for the system what localhost resolves to. This lookup is really, really quick. For instance, to get to stackoverflow.com you typed in that to the address bar (or used a bookmarklet that pointed here). Either way, you got here through a hostname. localhost provides a similar functionality.
Well, by IP is faster.
Basically, when you call by server name, it is converted to original IP.
But it would be difficult to memorize an IP, for this reason the domain name was created.
Personally I use http://localhost instead of http://127.0.0.1 or http://username.