Wireguard server DNS forwarding vs. custom DNS servers on client?

Routers VPN, DNS, Leaks
1

DNS settings are a bit confusing on GL.iNet routers, and I'm not the first one to say that here.

With a Wireguard server hosted on a GL.iNet router (with an ISP router upstream) at Location A and a Wireguard client on a GL.iNet router at Location B, you have a few DNS options to choose from on the client router.

  1. Set the DNS IP to your Wireguard Server IP in the Wireguard client config (and use "Automatic" DNS mode)
  2. Set the DNS IP using "Custom DNS server(s)"

In both of these cases, the DNS traffic goes through the Wireguard tunnel from Location B to Location A. However, in #1 the DNS request has to be "forwarded" once it reaches the server. In #2, the DNS request traffic goes directly to the specified custom DNS server once it exits the tunnel at Location A.

My question is: does this extra step of "DNS forwarding" add any latency or decrease performance in any way? Is there any reason to choose one over the other?

2

I don't see latency in these settings.

But setting a public DNS in the wireguard seems the most easy solution.
DNS combined with vpn is the most popular reason that causes issues.