Minimum options for a caching dnsmasq server where it uses the system's /etc/hosts file for local dns names and then contacts the upstream server specified in /etc/resolv.conf if not.

dnsmasq.conf

# /etc/dnsmasq.conf
#
# Minimum options for a caching dnsmasq server where it uses the system's
# /etc/hosts file for local dns names and then contacts the upstream server
# specified in /etc/resolv.conf if not.

# expand-hosts will append the value of domain to the end of any requests it
# receives without a '.'. So a query of 'host' would lookup 'host.MyDomain.com'
# in /etc/hosts
domain=MyDomain.com
expand-hosts

# reverse dns lookup for a private ip range that can't be found in /etc/hosts
# will be rejected instead of sending to upstream name server, which is
# typically what you would want
bogus-priv

# When answering replies from /etc/hosts set the ttl to this value. Default is
# 0 seconds so don't cache at all. 60 seconds isn't too long and will reduce
# load on this server
local-ttl=60

# Default is to use syslog. Use /dev/null to remove all logging
#log-facility=/var/log/dnsmasq.log
# This logs all queries for debuging or auditing
#log-queries