Comment 25 for bug 1670959

Hmm I knew I remembered something related ...
In bug 1694156 we have had a - what appears to me as - similar case.
There we could track it down to a config issue, but maybe you here are affected by the same issue yet without a simple config issue to fix.

The clue there was, that that dnsmasq was configured as global dns server to resolved in a manually added /etc/resolvconf/resolv.conf.d/tail. Due to that searches to the local search domain that failed started to be passed back and forth between dnsmasq and systemd-resolvd.
Does anybody affected here have the same setup of dnsmasq being registered as global dns? You can check with:
 $ systemd-resolve --status
The local dnsmasq should not more be listed in there.

Not sure - but if all affected users would have such a "local dnsmasq is configured as global dns in systemd-resolved" then we will have to find which package/config/guide/upgrade-path sets it up that way and resolve that - but first of all please verify that this would help you.

Also as another option if you explicitly want your local dnsmasq to be configured in resolved as global dns server - then you might want to check if dnsmasq's option "--dns-loop-detect" via DNSMASQ_OPTS in /etc/default/dnsmasq.