Part of the localnet script is setting up the system's hostname. This needs to be configured in the /etc/sysconfig/network.
Create the /etc/sysconfig/network file and enter a hostname by running:
echo "HOSTNAME=[lfs]" > /etc/sysconfig/network
[lfs] needs to be replaced with the name the computer is to be called. Do not enter the Fully Qualified Domain Name (FQDN) here. That information will be put in the /etc/hosts file later.