Is it possible to customize the HOSTS file to make it so you cant connect to malicious sites... i think i saw something on youtube something about it... i just want to know..

Basically your hosts file is the first place your computer looks to do IP name address resolution, you type in a website and it checks the hosts file to see if that name exists in the hosts file and what numeric IP address it points to. Usually it doesn't find it so it then goes to a DNS server to look up the name's address from public nameservers.

To use the hosts file to block sites you don't want access to, you simply enter in the name of the site and give it a bogus IP address, usually 127.0.0.1, which in TCP/IP language means your own computer's address. You can get hosts files with the names of malicious sites already added on sites like this: http://www.mvps.org/winhelp2002/hosts.htm

If you want to do this painlessly, Spybot basically allows you to do it at the click of a button. I've been using their hosts file for some time, just updating it now and then. It does add an extra layer of protection against malicious websites.

I've recently started using the MVPS hosts file (which seems to be the one everyone recommends), assisted by a little program called HostsMan that was recommended by a couple of excellent contributors to the Defender newsgroup. This too makes the process almost painless - not so easy as Spybot, but still pretty straightforward, with a simple updating process. If you want to try it, you can get HostsMan here:
http://www.abelhadigital.com/

So Basiclly if i make it go to goggle(.com) i can make it redirect it to google by using the hosts file and googles ip?

Yeah, that would work.