Problem with subdomain wildcard and localhost

Hello

I wish to have a configuration which allows for subdomains to be accessable without actual real sub folders created.

Example

jack.localhost, this would be the direct url, but nginx would parse it as localhost/?query=jack
steven.localhost -> localhost/?query=steven.

I have tried loads of rewrite rules, via server_name, and location, but none seem to work.
Im sure I must be missing something here.

Thanks in advance for any reply.