> What happens if the routers in the networks are trunked and vlan tagged? Is it then still possible to use the loopback interface to perform domain lookup, ftp or curl?
VLAN tagging or LAG trunking are options _for physical interfaces_. You can't tag or LAG _a router_ itself (or any other device).
You need to use an interface address to send anything to a device. Since any interface can be down in case of failure, a virtual loopback interface can be created and used. The loopback is always up and can always be sent to as long as there's a path to the device. Also, it's address doesn't need to change when you renumber networks and interfaces, so it can be used as a constant reference to the device.