Can anyone explain localhost phenomenon?

[Charles Bradshaw]

If I specify localhost as the host name for both imapd and sendmail sql plugin
authentication like this:

eg /etc/imapd.conf contains:
  sasl_sql_hostnames:localhost:3306     << changing localhost to mail-host here

and /etc/sasl2/Sendmail.conf contains:
  sql_hostnames:localhost:3306          << and here works!

Using localhost the connection to mysql fails for the sendmail connection
while the imap connection succeeds.  On the other hand, if I use the servers
real host name instead of localhost then both connections succeed!

This must be something to do with the sql plugin and mysql using a socket when
connecting to localhost! But what?

Command line connections to mysql, from 2 different terminals, to localhost
for the same user like this:

$ mysql mail --user=****** --password=*******

work just fine!

Confused, Charles Bradshaw