The explanation in the comments is correct ONLY if dnsmasq would send dns requests to a public DNS server.
Most consumer routers will do DNS forwarding themselves, so in these cases dnsmasq would be sending requests to an internal DNS server not a public one.
This internal DNS server is usually the only one capable of resolving local hostnames, blocking requests to it causes problems for many people. People are experiencing the problem in the forum.
Removing the domain-needed line should fix the issue and will enable resin and containers to lookup plain hostnames.
Dnsmasq is configured to never forward plain hostnames (ie. ones without a dot or domain) to the upstream DNS server.
This means that resin (and any containers) are unable to resolve any plain hostnames, since dnsmasq refuses to look them up.
https://github.com/resin-os/meta-resin/blob/ff0e3716e58c48ecd31a5e46d13a68a880507518/meta-resin-common/recipes-connectivity/dnsmasq/files/dnsmasq.conf#L20-L27
The explanation in the comments is correct ONLY if dnsmasq would send dns requests to a public DNS server. Most consumer routers will do DNS forwarding themselves, so in these cases dnsmasq would be sending requests to an internal DNS server not a public one.
This internal DNS server is usually the only one capable of resolving local hostnames, blocking requests to it causes problems for many people. People are experiencing the problem in the forum.
Removing the
domain-needed
line should fix the issue and will enable resin and containers to lookup plain hostnames.