I’ve been having a long-running conversation with various folks in the Ubiquiti
Forums here
[https://community.ubnt.com/t5/UniFi-Routing-Switching/UniFi-USG-local-DNS-not-resolving-local-hostname-correctly/m-p/2031489#M54558]
and here
[https://community.ubnt.com/t5/UniFi-Routing-Switching/