Ouch, the first thing that strikes me is:
The .local domain is reserved for (zeroconfig) multicast dns rfc6762, .local. Watch out for conflicts with your Dnsmasq configuration
Per the OpenWrt Wiki on ZeroConf. dnsmasq is used by OpenWrt for local DNS resolution & DHCP assignments. I’m not the right guy to ask but I’d think you’d have far better luck at the OpenWrt forum itself.
Regardless I’d see about making a backup before diving deep into your conf files. You can always bail out with a backup.