Sandbox and Permission
For security reason and to release on Mac App Store, iHosts runs in Sandbox mode. It means by default iHosts can't access any file out of Sandbox. Thus to edit Hosts, you need to manually allow iHosts to access the /etc/hosts file.
And by default current user can't edit the /etc/hosts file. Then when switching Hosts for the first time, you need to open Terminal to allow current user to edit /etc/hosts file by running a command.
These steps seems complex, but in fact you only need to do it for one time. And then you can freely edit or switch Hosts. In another time, it brings more security, as iHosts never runs in Administrator mode.