gzip nginx - not working on multisite server but does from localhost

I ran through the tutorial here - https://www.digitalocean.com/community/tutorials/how-to-add-the-gzip-module-to-nginx-on-ubuntu-14-04

and it says to add test files which go here

sudo truncate -s 1k /usr/share/nginx/html/test.css

then test like this

curl -H "Accept-Encoding: gzip" -I http://localhost/test.css

It seems localhost going here /usr/share/nginx/html/ ok that is fine…

And here it works! BUT on my actual server location here

/var/www/sites.co/html/test.css.

I get gzip not working.

I have tried enabling gzip in the sites-available nginx server block config like this

   gzip_min_length  1100;
etc

It’s not clear if these commands should go in the location blocks or higher level server block. I tried both anyway but both don’t seem to work…

BUT if the root gzip is working for the tutorial on my server why is it not working in my website…

Thanks for ideas. [Edit] I am wondering if it is because the domain isn’t working yet and am testing the live ip address and because of this it is ignored? But if that were true the default SHOULD be working?