iirc the hosts file was the primary DNS at the time, and would sync every 24 hours from a master hosts file online. Thus not needing TLDs to resolve hostnames.
While this would work, Internic would need to share the same HOSTS file. I don't remember a global shared HOSTS like that.
When Windows 95 came out I created an online shared cdplayer.ini where everyone added their own track info and we intended to create a file that had info for every CD in the world (this was before CDDB was invented). Sadly the project self-destructed because W95 had a hard 64Kb limit on .ini files.
TIL the Internet once ran on a shared text file.
"This data base is an
extension of the old ARPANET Hosts.txt file, and is being
maintained by the NIC to provide continuity during the
transition and expansion to the internet environment."
