Two immediate I can think of:

1) You don't have to add new .dev hosts to /etc/hosts repeatedly. Once you're setup, all .dev is local

2) /etc/hosts doesn't support wildcards, so dnsmasq is great with apps that have many or randomized subdomains.

I think this is really useful when you combine it with vhosts on apache/nginx. On my linux machine I run something similar that allows me to serve static assets, run a local dev server (runserver/flask/unicorn, etc) and have a .dev domain to test with.

You can then combine this with xip.io and be able to share your dev site with others.

I read the article and just thought it's over engenering. I wonder how many different web sites do these people have to configure on their laptops every week.