I'm trying to get my head around how the networking of it works. Is local.webcontainer.io being overridden somehow on the browser like a hosts file might do? Trying to figure out how I'm hitting that URL from another tab
There is a service worker registered on the domain name, for example https://nextjs-agaw8i--3000.local.webcontainer.io/, then when you visit this URL in another tab it basically shares the service worker from the stackblitz tab.
Must be some sort of tunneling, because it works outside the browser too
If by "works" you mean "serves up an error page". It's a standard domain, not real localhost, and it needs the service worker from the editor page running to work properly.