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from what I have understood the new .blog domain to be is that, since it is a new type of domain, you will have the chance to get one ahead of others.

so yes it is still hosted by Wp but remember any special features after that you will want for your blog will still need to be purchased....below is a link that explains the process more.

https://en.blog.wordpress.com/2016/11/02/applications-now-open-for-early-landrush-blog-domains/