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OCI images commonly ship an empty /etc/hosts and rely on the container runtime to bind-mount a generated one. The VM driver does not, and guest init wrote /etc/hostname and /etc/resolv.conf but never /etc/hosts, so localhost did not resolve: the guest resolver is the loopback relay, which has no record for it. Add configure_hosts to guest init, called after configure_hostname. It writes IPv4 and IPv6 localhost entries when the file is missing or empty, keeps a non-empty file and leaves a symlink alone, because an absolute link target would resolve against init's own root. A write failure logs a warning and boot continues. Cover the file states and the boot-path call site with tests that run the shipped init function under bash. Closes #3934 Signed-off-by: Shiju <shiju@nvidia.com>