127.0.0.1 is the local host, means the local ip that your OS assigns to your machine(or you can say your Network Adapter)...
It is used for testing purpose....for e.g say to test weather there's an issue with the Network adapter or no....when you ping 127.0.0.1 you get reply from the same...if there's a reply means all's fine...but if there's no reply means something wrong with the adapter....
You can check C:/Windows/System32/Drivers/etc
here you will find a file named hosts(which is used for name resolution purposes)...open it with notepad...
Hope this helps!!!
If you need more info check the link provided by Striker10...
Partially correct & partially incorrect....
It's not a location of any website or does'nt represent any connection...
But its your own computers location which OS uses for internal purpose...:bleh: