- make sure you have enabled the feature “Enable DHCP clients in DNS” in Foris web UI (not in LuCi)
- fiddling with DNS-related settings of dnsmasq in LuCi has no effect, it is a trap => 3.8.1 in RC: better DNS work and new Nextcloud
- if you want to go with “Static Hosts” route please read about my working solution here: DNS: which resolver to use?