Yes. Networking overall is concerned with IP addresses and IP addresses are what is connected with hostnames. You can get hardware addresses only on the network segment you are on, they are not universally valid.
In the absence of hostnames, Pi-hole also tries to derive hostnames from IP addresses known to be from the same device. For this, we use the hardware address.
This reads as if you want to setup conditional forwarding. This allows your router to be used as forwarding destination for name lookups and should immediately give you want you want.
My ISP-provided router is not really open to config. But even this wouldn't give me nice results since some devices do not have hostnames, but hw address are universally available locally since this is a local network setup
Main reason I do not like pi-hole DHCP is that I do not consider it reliably available. With router serving as DHCP and providing secondary external DNS if pi-hole device shuts down I am fine, but with DHCP on pi-hole I will have to somehow ensure it is reliably always on
I have had no instances where the router was running and pihole wasn't, unless the power went out at which case I would have had to properly restore power to both any ways for them to both work reliably. Pihole itself doesn't stop working if it is running on a clean environment void of any problems.
I would challenge you. If you get the time, try to establish a clean platform. Pihole has made tremendous improvements over the last 2 years. If you want to maintain a correspondence on here of any challenges or more Q/A, I would love to continue chat on things you have tried or things you are going to try. I can offer up suggestions from there. Idk if too many people will be able to provide the best answer for you because there may be numerous reasons why your client connections are not advertised adequately. On suggestion I could offer up is to take the time to identify your devices in pi-hole itself. Establish a host name in either /etc/host or using the local pihole gui options.
the question of establishing a clean platform amounts basically to buying a separate device for it that wouldn't be doing anything else, not gonna happen soon
There is quite a bit of confusion regarding these terms. The router advertises primary DNS and secondary DNS, which implies they are used in strict order.
In actuality, to most clients these appear as this DNS and another DNS, and clients are free to use either at any time. Providing a DNS to clients that is not a Pi-hole leads to DNS traffic bypassing Pi-hole.
This is more of a problem than no use of Cloudflare DNS. You can eliminate this entry and provide either the IP of the Pi-hole again in the second position or put an unused IP from your LAN range in the second position. Then all traffic goes through Pi-hole.