How does Safari do DNS resolution?

[Robert Nicholson]

I've got an entry in my hosts file that points site A at ip address Z 
and if I ping A it does
contact Z. However, whenever I'm in Safari, or IE for that matter it 
picks up the actual DNS mapped ip address instead of the ip address 
defined in my /etc/hosts.

It's my believe that lookupd is configured to look at flat files first 
so why is it that these browsers are doing their own DNS resolution?