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Well, you'd do that for internal purposes. Anyone could set one up, so in that sense it would "work" for most people, but it wouldn't resolve for people who don't use the name server that the zone is setup on. I can see a use for it, but I think it's easier, conceptually, to create a private subdomain within an already established and registered publicly accessible domain and limit its access with views (a capability/feature of ISC bind (and perhaps others) where different zones are made available based on the source address of the DNS query).

The .local TLD, which is where zeroconf/rendezvous hosts end up is a standardized example of that. It is resolved not via regular name servers, but rather a network-segment limited distributed broadcast (an oversimplification), however.

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