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[Launchpad Bug Tracker <1647910@xxxxxxxxxxxxxxxxxx>]

This bug was fixed in the package cloud-init - 0.7.9-0ubuntu1~16.10.1

---------------
cloud-init (0.7.9-0ubuntu1~16.10.1) yakkety; urgency=medium

  * debian/copyright: update License field to include Apache-2.0
  * debian/update-grub-legacy-ec2: fix to include kernels whose config
    has CONFIG_XEN=y (LP: #1379080).
  * debian/update-grub-legacy-ec2: detect kernels ending in -aws as
    ec2 bootable (LP: #1655934).
  * New upstream release.
    - doc: adjust headers in tests documentation for consistency.
    - pep8: fix issue found in zesty build with pycodestyle.
    - integration test: initial commit of integration test framework
      [Wesley Wiedenmeier]
    - LICENSE: Allow dual licensing GPL-3 or Apache 2.0 [Jon Grimm]
    - Fix config order of precedence, putting kernel command line over system.
      [Wesley Wiedenmeier] (LP: #1582323)
    - pep8: whitespace fix
    - Update the list of valid ssh keys. [Michael Felt]
    - network: add ENI unit test for statically rendered routes.
    - set_hostname: avoid erroneously appending domain to fqdn
      [Lars Kellogg-Stedman] (LP: #1647910)
    - doc: change 'nobootwait' to 'nofail' in docs [Anhad Jai Singh]
    - Replace an expired bit.ly link in code comment. [Joshua Harlow]

 -- Scott Moser <smoser@xxxxxxxxxx>  Tue, 31 Jan 2017 21:02:28 -0500

** Changed in: cloud-init (Ubuntu Yakkety)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/1647910

Title:
  hostname is set incorrectly if localhostname is fully qualified

Status in cloud-init:
  Fix Released
Status in cloud-init package in Ubuntu:
  Fix Released
Status in cloud-init source package in Xenial:
  Fix Released
Status in cloud-init source package in Yakkety:
  Fix Released

Bug description:
  If no data source is available and the local hostname is set to
  "localhost.localdomain", and /etc/hosts looks like:

    127.0.0.1   localhost localhost.localdomain localhost4
  localhost4.localdomain4

  Then in sources/__init__.py in get_hostname:

  - util.get_hostname() will return 'localhost.localdomain'
  - util.get_fqdn_from_hosts(hostname) will return 'localhost'
  - 'toks' will be set to [ 'localhost.localdomain', 'localdomain'

  And ultimately the system hostname will be set to
  'localhost.localdomain.localdomain', which isn't useful to anybody.

  Also reported in:

  https://bugzilla.redhat.com/show_bug.cgi?id=1389048

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