sounds like a bug, i contacted engineering and they said the same thing. I submitted it as a bug on github for the secure proxy.

Are you using the Firefox Private Network add-on (Cloudflare), or are you in the beta of the Firefox Private Network VPN (Mullvad)? With the built-in DNS-over-HTTPS ("DoH") feature, Firefox looks up addresses using a remote DNS service instead of using the Windows DNS service. Firefox never reads the hosts file directly. When you resolve DNS through Windows, Windows reports the addresses in the hosts file to applications. So as far as I know, it is completely normal that if you bypass Windows DNS then the hosts file is not used. If you want to use DoH ''and'' a hosts file, I think you may need to wait until Microsoft adds DoH to the Windows DNS service (probably later this year, but I haven't seen a timeline since [https://techcommunity.microsoft.com/t5/networking-blog/windows-will-improve-user-privacy-with-dns-over-https/ba-p/1014229 they announced their intention to add it last November]). Or find a way to use it "upstream" from Windows, in your router or another one of your network devices. Or you could switch to using an add-on for whatever purpose you are using your hosts file.