judging from the Dnsmasq list, the problem is that --local is supposed to be an alias for --server, but the recent rewrite of the address logic apparently made it an alias of --adress instead.
If I use --server instead of--local, everything works as expected. (At least as far as I can tell.)
I can't say if the other version was also affected as we never tried that one and I won't have a chance to check for a while.
Basically, AFAICT, this boils down to:
Make --local a proper alias for --server again.
The alternative would be to update the documentation, but since this is a breaking change for existing installations, I don't think that would be appropriate.
Cheers,
Sven