I was able to find a solution.
In my hosts configuration I had the host name, MAC address and an IP. This was enough before as I assumed leaving the domain of the host entry blank would have it automatically inherit the system domain.
Now that I've also populated my local domain in the domain field for all of the hosts, they are resolving now.
Edit:
I should note before making that change I had tried apply multiple times and even restarted the service. The dnsmasq-hosts file was being populated but not with the FQDN, just the host name. Now by adding the domain the dnsmasq-hosts file has both the FQDN and the host name.
Edit2:
Enabling "DHCP FQDN" in the dnsmasq general settings also fixed the issue and I no longer have to specify the domain in the hosts entry for the reservation. I prefer this approach as it automatically inherits the system configured domain. Using this setting seems obvious now, but I don't know why it was working under 25.1.6 without this.
In my hosts configuration I had the host name, MAC address and an IP. This was enough before as I assumed leaving the domain of the host entry blank would have it automatically inherit the system domain.
Now that I've also populated my local domain in the domain field for all of the hosts, they are resolving now.
Edit:
I should note before making that change I had tried apply multiple times and even restarted the service. The dnsmasq-hosts file was being populated but not with the FQDN, just the host name. Now by adding the domain the dnsmasq-hosts file has both the FQDN and the host name.
Edit2:
Enabling "DHCP FQDN" in the dnsmasq general settings also fixed the issue and I no longer have to specify the domain in the hosts entry for the reservation. I prefer this approach as it automatically inherits the system configured domain. Using this setting seems obvious now, but I don't know why it was working under 25.1.6 without this.