I only want it do one thing, gives the locally configured IP address when it has the records. Otherwise go talk to 8.8.8.8.
Any suggestions?
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Have a look at CoreDNS.
Personally I avoid running a local DNS server, as most of the gateway, router, firewalls allow you to configure static host entries which are then automatically resolved.
I just use pihole as a local dns. Ad blocking is nice, but you can disable that part if you’d like and just use it to server local DNS records.