I'm facing the same issue here that my local domain (with ending ".local") gets listed in the PiHole admin console as one of the faremost top domains.
In the PiHole web admin console, I have already ticked the boxes "never forward non-FQDNs" and "never forward reverse lookups for private IP ranges" under "Settings -> DNS -> Advanced DNS settings".
In addition to these settings, I have addedd the server's host name with its .local domain name in the "/etc/pihole/local.list" and "/etc/hosts" files, and have updated the "/etc/dnsmasq.conf" and "/etc/dnsmasq.d/01-pohole.conf" to include the line "local=/local/" as directive for DNSMasq to use the entries in /etc/hosts for local domain queries.
Still, even after a restart of the PiHole server, the siutation remains the same. Any other options to pursue this further?