Thank you - a baseURL of localhost/blog/ works fine. I suppose it’s a bit counter-intuitive that just /blog/ doesn’t work with the Hugo webserver.
A minor inconvenience is that this adds “localhost” to the URLs in all my static pages, so I’d have to change config options between my local and published versions. Thankfully I just found (here) that I can set my baseURL to “//domain.tld/blog/”, which removes the domain name when the pages are generated. So that’s taken care of. 
The change also broke all static file links (images etc.) in my blog post contents, but I’ll try fixing that with custom shortcodes as described in this post.
Thanks for the indepth discussion link as well!