
127.0.0.0/8 is earmarked for what is called "loopback". This construct
is to allow a node to test/validate its IP stack.  Most software only
uses a single value from this range, 127.0.0.1/32 for loopback
purposes.  It is treated with the same levels of restriction by router
and host requirements and implementations so it is difficult to use
any other addresses within this block for anything other than node
specific applications, generally bootstraping.  All in all a
tremendous waste of IP space. Good thing we'll not likely need it.

(excerpt taken from draft-manning-dsua-00.txt, "Documenting Special
Use IPv4 Address Blocks")
 
Thanks.

IANA