Neil Anderson's CCNA course didn't really drive the idea home. It's a /32 logical IP configured on a router for management purposes from what I gather. Still have no idea how it works. Is it always configured? Not related to a 127.0.0.1 in anyway, I assume?

Edit: Neil's Udemy video 'Adjacencies and Passive Interfaces' helped reinforce the ideas presented here. No substitute for seeing it in action. Thank you, folks.