How does VS2010 configure a service link with localhost?

Question

I go and set up a service link to something like

http://localhost/myService/test.svc

However, apparently, it does some magic, and ends in the * .disco file (and elsewhere)

http://mymachine.mydomain.com/myService/test.svc

I am trying to understand why this is happening.

Update. They seem to be trying to "help", but the IDE continues to give the impression that you are connecting to localhost. In 99.9% of cases, this is probably excellent. In my case, I connect to a service that checks its domain name licenses. Working with "localhost" should be used for dev and test purposes.

The corresponding part of the * .config file ends as follows:

<system.serviceModel>
    <client>
        <endpoint address="http://mymachine.mydomain.com/myService/test.svc/Account"
            binding="wsHttpBinding"
            bindingConfiguration="WSHttpBinding_IAccount"
            contract="ServiceReference1.IAccount"
            name="WSHttpBinding_IAccount">
            <identity>
                <dns value="localhost" />
            </identity>
        </endpoint>
    </client>
</system.serviceModel>