Hi,
Mhm, your doing it right, as your said, if you set up your hostname with loopback, you are the only one who can access Kibana.
For your case, if people want to access your Kibana,
Set up server.host: your_lan_ip
With this, people typing your_lan_ip:5601 in brower will get access to kibana succefully (if firewall is configured too !)
/etc/hostname is the current name of the machine, with hosts you can set any names to any ip's that's a bit different !
Example : you can set : blabla 127.0.0.1, your machines (localy) will result blabla with your loopback.
I hope I was clear in my remarks. 