Have Pi-hole resolve Local DNS entries for multiple domains?

I've been on a yak shaving expedition recently migrating some local servers to netplan and networkd and have got them working and passing their queries to Pi-hole as fqdns when presented with only a hostname.

Pi-hole is also doing DHCP, and the Pi-hole domain name (dnsmasq domain=) is set to mydomain.com.

Pi-hole has a long list of hostnames in its Local DNS Records (and therefore in /etc/pihole/custom.list) and I have the expand-hosts option set in a separate config file in /etc/dnsmasq.d/, so my-server01 and my-server01.mydomain.com both resolve successfully as server01.mydomain.com.

Since migrating from /etc/network/interfaces and ifupdown to netplan and networkd I have an application that will only send queries to the Pi-hole in relation to local devices with the .local domain. How can I configure Pi-hole / dnsmasq to resolve these queries from the Local DNS Records / custom.list file for both hostname.local and hostname.mydomain.com?

Desired Behaviour:

Pi-hole would resolve both myserver01.mydomain.com and myserver01.local to the same IP address.

Actual Behaviour:

Pi-hole resolved myserver01.mydomain.com and myserver01 but not myserver01.local

Debug Token:

pihole -d hangs on "*** [ DIAGNOSING ]: Dashboard headers"