I dont understand host connections

I am trying a host connection but to no avail. In postgresql.conf I
have tcpip_socket = true and port = 5432. In pq_hda.conf I have

host all 0.0.0.0 0.0.0.0 md5 optix.conf

with two users in optix.conf. Efforts to log in fail:

$ psql -U thad optix
psql: FATAL 1: No pg_hba.conf entry for host localhost, user thad,
database optix

But if I put

local all md5 optix.conf

in pg_hda.conf and restart PostgreSQL, I'm prompted for a password and
can log in.

I'm running PostgreSQL 7.2.2. on an RedHat 6.2 machine.
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Thad Humphries "...no religious test shall ever be required
Web Development Manager as a qualification to any office or public
Phone: 540/675-3015, x225 trust under the United States." -Article VI