DNS / dumb question

[Mikensan]

Current setup is.. Cable Modem > ubiquiti USG > Switch > pfSense > servers

pFsense DHCP is set to assign my DC as a DNS server. My DC points back to pfSense (forwarder)

pfSense is using pfBlockNG with DNSBL and GeoIP.

DNSLB is set to be transparent and listening on a virtual IP, looking for 80 and 443 traffic.

 

What is confusing me... I've removed the manual DNS entry from System > General and have "Allow DNS server list to be overridden by DHCP/PPP on WAN." I have my WAN IP configuration set to static. So in theory... I should have no external DNS servers assigned. When I go to Status > Interfaces, I only see 127.0.0.1 as an assigned DNS server. However, I can still resolve external DNS queries. I'm curious if it is sending broadcast packets for DNS queries or how it is resolving these names?

 

Normally I would set an IP under System > general and uncheck override, but when I do this the firewall itself cannot resolve names anymore (thus can't download packages / pfblocker can't update aliases / dyndns can't update).