Because, YOUR address on IRC is defined by the server, usually you will find when you connect it will get your ip and store it againest your nickname, as a result by simply editing the data the server has stored (using /chghost) it can change your address, and in this case, he has used localhost.net which is a REAL domain, which resolves to 127.0.0.1
/dns localhost.net
Just like if he was to "spoof" his host to be 'www.com' then it would resolve to '63.215.91.200' because mIRC takes the host/ip and independantly resolves it without the help of the server.
Its a bit confusing trying to explain it, sorry if you dont quite get it.
Eamonn.
