ICANN deliberated and decided that dotless domains would interfere with the stability of the internet.

Here is a perfect example, http://localhost is a dotless domain. If hypothetically it was awarded to a registry, it would mean that our computers would be confused on who really is local host between the local root and the international root. Ok, that example if far fetched because localhost can never be delegated.

Now to quantify my example, suppose the word "matrix" is given out as a dotless domain? How many servers in the world are named matrix? Thousands I suppose. So in the LAN and WAN setting, all traffic to http://matrix would go to the local server, and would never reach the delegated root server for http://matrix and this would destabilize the DNS system.

Regards