I was wondering what your thoughts are for adding a feature for not forwarding queries for local domains, I know there is an option when you use pi-hole as a DHCP server however not from standalone (unless i am mistaken, which is highly likely)
I added the below line to /etc/dnsmasq.conf
local=/contoso.com/
And it seems to have worked, queries for said domain are "OK (cached)" and are not "OK (forwarded)"
than queries to laptop.lan or something.lan should never get forwarded, even if they cannot be answered from cache (which will hold only the /etc/hosts entries for you as you don't use the DHCP functionality).