can micro-service interact with downstream service through localhost origin

Can micro-service interact with downstream service through localhost origin, since my all service is running in same server is that is correct approach ? I found that interacting a downstream service with domain name takes much time when compared to localhost. i was curious to know whether we can do like this ?

You're right, you can communicate with other services running in the same host with localhost. It's completely fine and when thinking about network round trips, it's beneficial.

But,

1. what if you want to scale the services?
2. What if you want to move any of the services to a different host?

While considering at least these scenarios, binding to a specific host is not worth. And this is applicable if you are using the IP of the host.

*I found that interacting a downstream service with domain name takes much time when compared to localhost.*.

I see what you're saying.

Microservices architecture is not a silver bullet for software development design and always come with tradeoffs

And about your deployment strategy Multiple Service Instances per Host pattern.

1. How you are going to handle if your services have different resource requirements?
2. say what if one of your services is utilizing all the host resource?
3. What if you need to scale out one independent service?
4. How you are going to ensure the availabilities of your services?
5. ..
6. ..

So there are so many questions you must consider before going with a pattern in microservices. It all depends on your requirements.