There's nothing to worry about here:
Such lookups are to be expected, they do not imply any failures, neither for Pi-hole nor for the client issuing the request.
Some software tools would customarily append a DNS query with the local search domain and issue a DNS query in addition to the domain that was originally requested (e.g. nslookup on Windows will do that).
So a request for a domain webserver.homenetwork.local (that already is an FQDN) would be expanded by .homenetwork.local, which would result in a query for webserver.homenetwork.local.homenetwork.local - just as you observe. 