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In short, the /etc/hosts file is a static mapping of server names and IP addresses. It's helpful in this case, as it takes precedence over a DNS look up. The OS will look here first before trying to resolve the address.
When adobe products phone home to validate that you have a paid-for copy, they use nice names like activate.adobe.com to reference their servers.
So the idea is you "override" the ip address your computer gets when it tries to visit one of these addresses.
To edit the file, open Terminal.app then type "sudo nano /etc/hosts", then add your custom entries after the line that says "127.0.0.1 localhost" and before the line with ::1 localhost (ipv6 looking stuff).
It's pretty simple from here. eg, if you want to make google.com go to 1.2.3.4 (don't do this..) Just add a line that says "1.2.3.4 google.com".
Press Ctrl+x to quit, and press y when it prompts.. Done deal. You should get a list of entries to add with your CS5.. Be sure to read "READ ME" and .nfo files..