(I also think that a .pseudo TLD should be made up which also cannot be assigned on the internet, but is also not for assigning on local networks either. Uusually, in the cases where it is necessary to be used, either the operating system or an application program will handle them, although the system administrator can assign them manually on a local system if necessary.)
There's already .example, .invalid, .test and .localhost; which are reserved. What usecase do you have that's not covered by one of them?
.invalid means that a domain name is required but a valid name should not be used; for example, a false email address in a "From:" header in Usenet, to indicate that you cannot send email to the author in this way.
.test is for a internal testing use, of DNS and other stuff.
.localhost is for identifying the local computer.
.internal is (presumably) for internal use in your own computer and local network, when you want to assign domain names that are for internal use only.
.pseudo is for other cases that do not fit any of the above, when a pseudo-TLD which is not used as a usual domain name, is required for a specialized use by a application, operating system, etc. You can then assign subdomains of .pseudo for specific kind of specialized uses (these assignments will be specific to the application or otherwise). Some programs might treat .pseudo (or some of its subdomains) as a special case, or might be able to be configured to do so.
(One example of .pseudo might be if you want to require a program to use only version 4 internet or only version 6 internet, and where this must be specified in the domain name for some reason; the system or a proxy server can then handle it as a special case. Other examples might be in some cases, error simulations, non-TCP/IP networks, specialized types of logging or access restrictions, etc. Some of these things do not always need to be specified as a domain name; but, in some cases they do, and in such cases then it is helpful to do so.)