That could've happened if the database is not accessible from the Internet and they were using a tunnel which binds to localhost (e.g. `ssh -L`).
It does make sense to connect to localhost on dev machines. But if that's the setup, I guess one should avoid from tunneling to localhost to avoid potentially dangerous confusion (hmm... I think I'm guilty of that on a couple projects, need to check if that's true...)
It doesn't even make sense to connect to a managed database using 'localhost'.
Managed databases are never localhost. They are hosted outside your VPS and you use a DNS name to connect to them.