Clients unable to resolve Pi-Hole hostname

By default, Pi-hole's embdedded dnsmasq would only automatically add DNS records for a simple hostname expanded by the local search domain if a DHCP client would claim that hostname during DHCP lease negotiation.
Any manual DNS definitions (including CNAMEs, PTRs, SRVs, etc.) would be added as is, i.e without considering the search domain.

You may try to enable expand-hosts as a custom configuration option, but note that according to dnsmasq documentation, this won't work for all definition types, but for definitions in hosts files only.

Adding the DNS records explicitly is the safer way to provide resolution for local FQDNs, and it will also work when Pi-hole is not your DHCP server.