/etc/hosts scales like a lead balloon.

For small groups of servers, with limited egress communication, it might nevertheless make sense. And then go for it, by all means. As a general replacement for DNS, not likely.

It is hard to see how Ansible should be simpler than DNS. Maybe if you have worked with Ansible and not DNS, you might think so.

Why not manage your one single DNS server with a tool like Ansible? Why fragment it and have to manage it on dozens/hundreds/thousands of endpoints instead?

There is absolutely nothing simple about managing a hosts file across your fleet rather than DNS.