It is not a prerequisite for SnapMirror. What problem did you face when you tried to perform SnapMirror using System Manager before updating /etc/hosts file.
Also, what did you update in /etc/hosts file ?
Please provide us the support bundle and we will look into the problem.
If you properly configured the resolution of IP to Hostnames with interfaces in AD and all dns resolution is occuring thru it. you dont need to define in /etc/hosts files.
Make sure the proper interface is set for snapmirror.access option.