It's a simple trick, hotel comes with a proxy.pac file https://github.com/typicode/hotel/tree/master/docs

You can use it to tell that .dev domains should be handled by hotel :)

So there's no magic (which is often better).

And what's great is that it's optional. Hotel can still help you in your day to day development workflow even if you don't use local domains (simply go to localhost:2000 instead of hotel.dev).