It allows you to, for example, access the router.
So, with, again, for example, these shitty technicolor routers, when supplied by BT (in my case). Out of the box the default IP address is 192.168.1.254
This can be pinged.
We have to disable loopback. This then stops us 'pinging' the router.
It does not prevent us access to the router but by doing a simple ping test you could be mistaken for thinking the router is dead/not present.