gistfile1.txt

Output with --extra-vars "hosts=foo":

Timothys-MacBook-Pro:ansible-test tgerla$ ansible-playbook -i inventory2 test-nulty.py --extra-vars "hosts=foo" -c local

PLAY [foo] ********************************************************************
skipping: no hosts matched

PLAY RECAP ********************************************************************

Output with --extra-vars "hosts= foo":

Timothys-MacBook-Pro:ansible-test tgerla$ ansible-playbook -i inventory2 test-nulty.py --extra-vars "hosts= foo" -c local

PLAY [] ***********************************************************************

GATHERING FACTS ***************************************************************
ok: [two]
ok: [one]

TASK: [debug] *****************************************************************
ok: [one] => {
    "var": {
        "hosts": ""
    }
}
ok: [two] => {
    "var": {
        "hosts": ""
    }
}

PLAY RECAP ********************************************************************
one                        : ok=2    changed=0    unreachable=0    failed=0
two                        : ok=2    changed=0    unreachable=0    failed=0

gistfile2.txt

I guess what's happening is that we're parsing the extra vars as:

hosts: <empty string>
foo: <empty string>

Instead of:

hosts: " foo"

test.yml

---
- hosts: "{{ hosts }}"
  tasks:

  - name: debug
    debug: var=hosts