Fortunately, redirection to a file: URL will result in a browser error. Unfortunately, the browser does not explain what is wrong (although the redirect can be viewed in the developer tools, you might not know to look there, and it still doesn't have an error message to explain the problem).
While that is true for modern browsers, some backend http client libraries will follow the redirects. So; if you have a system that given an URL that fetches + displays the content, and you use a service that issues redirects to things like the AWS metadata service, or file:///etc/passwd --- well, the backend library is gonna redirect to the bad place, if it only checks the initially submitted url.
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[ 3.3 ms ] story [ 33.8 ms ] thread...watch me.
Go's http.Redirect function allows non-3xx statuses, and also renders a trivial page with a status message and link:
https://301party.com/451?url=javascript:alert(%27hello%27)
Alas not infinitely recursive but enough to make your browser give up:
https://301party.com/301?url=/301?url=/301?url=/301?url=/301...
[edit to add:] https://301party.com/0 causes a panic