Should AGH use /etc/hosts for resolving local addresses?

[badigit]

AdGuard Home v0.107.52
For example, with the following hosts file:

127.0.0.1 localhost
::1 localhost
10.9.0.8 smart.home

It cant resolve and still try use public resolver

When running these commands:
~ # nslookup 10.9.0.8
Server:    1.1.1.1
Address 1: 1.1.1.1 one.one.one.one

Name:      10.9.0.8
Address 1: 10.9.0.8

~ # nslookup smart.home
Server:    1.1.1.1
Address 1: 1.1.1.1 one.one.one.one

nslookup: can't resolve 'smart.home': Name or service not known

[tescophil]

It does use etc/hosts. but the machine your using to run the l nslookup command is using cloudflare's 1.1.1.1 resolver and bypassing your AdGuard home instance