As discussed with R&D, there is a special method that also as workaround:
uci set dhcp.@dnsmasq[0].domainneeded='1'
uci commit dhcp
/etc/init.d/dnsmasq restart
# The following is only needed for firmware version 4.6.x/4.7.x
sed -i '/domain-needed/d' /etc/dnsmasq.conf.vpn
. /usr/bin/route_policy
handle_dns
As I was trying this on a Beryl AX running 4.7.4 all of the workaround instructions were executed.
The bottom line was that there was no change in the resolver behaviour. FQDN would resolve, but those expecting to use the search domain did not.
Would these changes remain following a firmware upgrade?
Would these changes be overwritten after a restore from an earlier backup?
One thing that raised my curiosity is that /etc/dnsmasq.conf.vpn contained a dhcp-range=set referring to IP addresses that are not in my configuration (I.E. 192.68.8.x/24 addresses).
I think it would be useful if you post the command sequence to reverse these changes so I can be certain of getting back to the original configuration.