>On my machine, I have a shared folder called C:\DataVolume. I want to map that to the E: on this same machine. I know I can map a drive letter similar to how I would do it on any other machines on my network, but is that efficient? Will my machine detect that even though it's a "mapped network drive", it is still a local drive? Or will all traffic go through my switch and back to my machine?
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>Would this be a good place to use 127.0.0.1?

The network redirector is smart enough to know if a referenced share is local, and it won't try to go out across the wire. For example, you can do

NET USE E: \\MyComputer\MySharedFolder

and that will work fine, even if you unplug the network cable from your computer. If you're disconnected from your network, your machine acts as its own NetBIOS browse master, so it knows how to find the machine name and share you specify. Traffic that doesn't have to go out, doesn't go out.

If you're on a network where some other computer is the browse master (e.g. a Windows server OS machine), then the above NET USE command will go out to that machine, which will send back the information needed to resolve the machine and share name.

If you use 127.0.0.1 instead of MyComputer, you're bypassing NetBIOS and going straight to the machine via its IP address. It can be useful if you're on a network where NetBIOS is improperly configured, and you're getting a bunch of "browse master election" messages in your system event logs. In that case, you can see long delays (30+ seconds, or even complete failure) running a NET USE command with a machine name, because the machines on your network are arguing amongst themselves behind the scenes.

But, assuming NetBIOS is configured properly on your network, using the IP addresses just saves a few microseconds of lookup time, once, when the mapping is made.