Comment 4 for bug 1487361

I think this was deliberate upstream, probably this:

    - ssh(1): Tweak config re-parsing with host canonicalisation - make the
      second pass through the config files always run when host name
      canonicalisation is enabled (and not whenever the host name changes)

In fact this was not documented to work before; even in Debian stable the documentation for Host says "The host is the hostname argument given on the command line (i.e. the name is not converted to a canonicalized host name before matching)."

Try "CanonicalizeHostname yes", which is documented to control this.