Clients don't use Pi-hole

Your debug log shows no errors, and is working fine.

   [2022-01-02 22:50:16.071 16268M] Imported 114944 queries from the long-term database
   [2022-01-02 22:50:16.072 16268M]  -> Total DNS queries: 114944
   [2022-01-02 22:50:16.073 16268M]  -> Cached DNS queries: 3727
   [2022-01-02 22:50:16.073 16268M]  -> Forwarded DNS queries: 106040
   [2022-01-02 22:50:16.073 16268M]  -> Blocked DNS queries: 4190
   [2022-01-02 22:50:16.073 16268M]  -> Unknown DNS queries: 0
   [2022-01-02 22:50:16.073 16268M]  -> Unique domains: 1624
   [2022-01-02 22:50:16.073 16268M]  -> Unique clients: 3
   [2022-01-02 22:50:16.073 16268M]  -> Known forward destinations: 11

However, you distribute your router's IP as DNS server via DHCP. You could exchange this IP for Pi-hole's IP to announce it as DNS server via DHCP. This would have the advantage that you can see individual clients on your dashboard and can use the group management feature.

[✓] IPv4 address(es) bound to the wlan0 interface:
    192.168.1.223/24

*** [ DIAGNOSING ]: Discovering active DHCP servers (takes 10 seconds)
   Scanning all your interfaces for DHCP servers
   Timeout: 10 seconds
   
   * Received 332 bytes from wlan0:192.168.1.1
     Offered IP address: 192.168.1.223
     Server IP address: 192.168.1.1
     Relay-agent IP address: N/A
     BOOTP server: ecosystem.home.cisco.com
     BOOTP file: (empty)
     DHCP options:
      Message type: DHCPOFFER (2)
      server-identifier: 192.168.1.1
      lease-time: 86400 ( 1d )
      renewal-time: 43200 ( 12h )
      rebinding-time: 75600 ( 21h )
      netmask: 255.255.255.0
      broadcast: 192.168.1.255
      domain-name: "cust.communityfibre.co.uk"
      hostname: "raspberrypi"
      dns-server: 192.168.1.1
      router: 192.168.1.1
      --- end of options ---

Additionally, you use IPv6. That's OK, however your clients got GUA addresses (2a02:....) which might change frequently due to changed prefixes. You should see if you could use stable ULA addresses instead:

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