We do not need Ansible if we have no remote target to manage, right? Everything starts with the fact that we need to perform some task on a remote host. In Ansible, the way we specify the potential remote target is with an inventory file. We can have this inventory file as the /etc/ansible/hosts file or use the -i option to specify the file during playbook runtime. Personally, I prefer to have this file in the same directory where my playbook is and use the -i option.
Technically, this file can be named anything you like as long as it is in a valid format. However, the convention is to name this file hosts. You can potentially save yourself and your colleagues some headaches in the future by following this convention.
