Currently we message about the need for hosts entries after the installation is complete.
If the local setup is started with example-data we require the hosts entries in place even during the installation process as in order to create the provider configuration it is required to talk to kcp, which requires the hosts. entries.
Users then receive an error similar to this:
[15:16:00] Preparing KCP Secrets for admin access
Cluster "workspace.kcp.io/current" set.
User "kcp-admin" set.
Context "workspace.kcp.io/current" modified.
Switched to context "workspace.kcp.io/current".
Error: Post "https://kcp.api.portal.dev.local:8443/clusters/root/apis/tenancy.kcp.io/v1alpha1/workspaces": dial tcp: lookup kcp.api.portal.dev.local on 127.0.0.53:53: server misbehaving
task: Failed to run task "local-setup:cached:example-data:iterate": task: Failed to run task "local-setup:iterate": exit status 1