OK.
Can you please advise how to test dnsmasq configuration when it's embedded?
Normally this would work with command dnsmasq --no-daemon --log-queries and the output would help to identify some errors easily:
# dnsmasq --no-daemon --log-queries
dnsmasq: started, version 2.75 cachesize 150
dnsmasq: compile time options: IPv6 GNU-getopt
DBus i18n IDN DHCP DHCPv6 no-Lua TFTP conntrack
ipset auth DNSSEC loop-detect inotify
dnsmasq: reading /etc/resolv.conf
dnsmasq: using nameserver 192.168.0.1#53
dnsmasq: read /etc/hosts - 9 addresses
E.g. I'm facing an issue with name resolution of LAN (see here) and I have no option for trouble-shooting dnsmasq.