HOSTS files are static. They were never designed for blocking ads or tracking. And for all we know, every connection does a linear search through the HOSTS file so the larger it gets, the more wasted time, because it was never designed to have millions of entries.
To add to this, I've seen that stupid hosts file blacklist from SpyBot cause some Windows network service get locked up for 40 seconds every time the laptop was resumed from suspend or booted up in Windows 7. Parsing the hosts file took a relatively extreme amount of time for exactly this reason, massive hosts files are a kludge at best.
HOSTS files are static. They were never designed for blocking ads or tracking. And for all we know, every connection does a linear search through the HOSTS file so the larger it gets, the more wasted time, because it was never designed to have millions of entries.