You can do this using dnsmasq[1] on Linux or OS X and Acrylic DNS on Windows[2]. I guess if someone wanted to do more work, they could also just register their own random domain and point it to 127.0.0.1.

We're also talking about maybe 30 seconds of work per project to edit a hosts file. Someone who knows their command line will be able to do it in 5 seconds. Multiplied by 20 projects, that's still only 2 to 10 minutes of work every year.

I personally use localhost for everything and just work on one thing at a time. I never mess with hosts.

1. https://davejamesmiller.com/blog/installing-dnsmasq-wildcard...

2. http://mayakron.altervista.org/wikibase/show.php?id=AcrylicH...