This usually happens because you have a Linux setup that doesn't use systemd-resolved and it also doesn't have myhostname early enough in the list of name resolvers. Not sure how many Linux systems default to this, but if you want this behavior, adjust your NSS configuration, most likely.
You don't need systemd-resolved for .localhost domains to work. It works on systemd-based distros using another resolver as well as non-systemd distros.
I've never seen this not-work on any distro, must be a niche thing.
