Hints on setting up Pi-Hole as a local DNS Server

The issue I am facing:
I am running into difficulties getting pi-hole to properly see local machines. When running nslookup or dig. It is going to 8.8.8.8 for resolution instead of itself (127.0.0.1). I can't figure out what configuration I am missing.

Details about my system:
Ubuntu 18.04 in a VM on VirtualBox 6.1.14 on a MacMini host.

What I have changed since installing Pi-hole:
This is a fresh install. This is a test VM that I use to validate upgrades of OS and Pi-hole before I implement on my "production" machine. On the test machine, I did a in place Ubuntu upgrade to 20.04. This broke DNS. Trying to figure out the right procedures so that I can upgrade my "production" Pi-hole.

Any hints would be much appreciated.

What's the reasoning behind picking v5-0 and ftldns-beta as categories for your topic?
Pi-hole 5.0 has been released in May 2020 - there is currently no beta test.

With regards to your observation:
It would seem you are referring to DNS resolution for the machine that hosts Pi-hole, and since you are talking about updates, it may be a good idea to read the release notes:

  • Pi-hole no longer changes the nameserver assigned to the Pi (in /etc/resolv.conf). The existing nameserver settings for the Pi-hole host are respected and unchanged.

Also, have a look at Correct Resolv.conf entry in pihole 5.11 - #2 by jfb for different valid choices for your personal pick of DNS servers for the Pi-hole machine itself.

Sorry about the tag choices. I just was adding tags. Will ignore them next time.

Thanks. Tried pouring over all of the documentation and guides. But not the release notes. Thanks for the tip.

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