Glad it's working now.
What did bring it back to normal?
And to guard against future resolution failures on your PI-hole host:
Did you configure a static IP address on device?
If so:
Since you are running on RPi OS, consider adding a public nameserver to static domain_name_servers after 127.0.0.1 in your /etc/dhcpcd.conf.
This would allow your Pi-hole host to resolve DNS even when Pi-hole should be rendered inoperative for some reason.
I'm not sure what sure what brought it back to normal, I changed the nameservers to 8.8.8.8 and ran the pi-hole update as per your message a few mins back.
The update went ahead and completed and afterwards all the errors were gone.
I will follow your advice above.
Shall I change the nameservers back to 127.0.0.1 now to use unbound again?
The choice of nameserver used for the Pi-hole host device is separate and independent from the upstream DNS servers used by Pi-hole.
If you have Pi-hole configured to use unbound as upstream DNS server, that is what it will use.
The nameserver assignment on the Pi specifies which nameserver that specific device (not Pi-hole) will use. If you set it to 8.8.8.8, the device uses Google for DNS. If you set it to 127.0.0.1, that device will use Pi-hole for DNS, since Pi-hole is running on that device at the loopback address.
Also note that setting the device nameserver to 127.0.0.1 doesn't set that device to use unbound. Unbound is running on port 5335, not 53. The device will use Pi-hole for DNS, and Pi-hole in turn is using unbound for DNS. The device isn't using unbound directly.