In nginx the proxy_pass
directive is not resolving DNS using the /etc/hosts
file. Any way to enable this possibility (maybe by leveraging Lua as a last resort)?
In short, you need to install dnsmasq locally and use 127.0.0.1 as a resolver.
See this related question and answer:
When using proxy_pass, can /etc/hosts be used to resolve domain names instead of "resolver"?