Loopback Traffic Setting - Ping

With “Firewall → Firewall Settings → Filter loopback traffic (e.g.127.x.x.x, ::1)” setting ticked or unticked :
When running ping 127.0.0.1 in admin cmd window FW always pops up an alert “PING.EXE is trying to connect to the internet”.

Should the FW alert not pop up when the loopback traffic setting is unticked?

Note 1 : ping.exe is not added to the FW Applications Rules.
Note 2 : At the bottom of the FW Applications Rules I have a “All Applications” rule “Ask IP In/Out From MAC Any To MAC Any Where Protocol Is Any” in place.

Note 2 : At the bottom of the FW Applications Rules I have a "All Applications" rule "Ask IP In/Out From MAC Any To MAC Any Where [b]Protocol Is Any[/b]" in place.
That rule makes it to alert for any request for any protocol regardless of destination address. Remove that rule and you won't get an alert for localhost/loopback connections.

Having the rule removed now no FW alert shows up for either ticked or unticked setting, also for both ticked and unticked setting a ping FW custom rule is being added to the FW Applications Rules.
I would expect no ping custom rule being created when the setting is unticked. it seems to me that FW is still monitoring loopback traffic with unticked setting or?

Another thing is that when I put FW into “Custom Ruleset” mode this setting doesn’t have any effect either and again for both ticked and unticked setting the FW pops up an alert for ping like it did when I had my “All Applicationss” rule in place in FW “Safe Mode”.

What does this setting actually do? How does it work?

It looks like it does nothing now as it is hard-coded enabled. I have a feeling they did this when they fixed that bug with removing the loopback zone where it would no longer filter loopback traffic when the setting was on.

Edit: Actually it seems to only affect ICMP type traffic as both TCP and UDP will not alert when loopback filtering is disabled.

Confirmed.

With loopback filtering enabled (ticked) :
When I fire up Firefox (with removed Firefox “Web Browser” application rule) I get loopback alerts during Firefox startup phase. When Firefox is done starting and up and running (after allowing many FW alerts and without ticking “Remember my answer”) then opening a tab page at 127.0.0.1 gives another loopback alert.
When doing the same with loopback filtering disabled (unticked) then no Firefox loopback alerts show up at all (the other alerts show up of course).
I’ve tested the above in FW “Safe Mode” with my “All Application” rule in place at the bottom of the application rules.

So indeed, only for ping traffic the loopback filtering setting (either ticked or unticked) doesn’t matter, it is always enabled (ticked).