First of all, thanks for writing this. I've tried a couple of DNS proxies, currently running blocky, seems very promising.

This is rather similar to #133
Standard setup in LAN: clients get IP from DHCP server (router), announce their hostname to it (dhcpcd's hostname option). No domain is used.
So for all unqualified hostnames, the DNS query should go to the router, and not upstream.
conditional>mapping seems to nearly to this, but it seems it cannot match all unqualified hostnames.
An elegant solution would be to extend conditional>mapping to match all unqualified hostnames with some specific keyword (e.g. "unqualified_hosts") or character (e.g. ".")
Example:

conditional:
   mapping:
      1.168.192.in-addr.arpa: 192.168.1.2
      @unqualified_hosts: 192.168.1.2

I've read your concerns regarding dots in the host name, but I really think that's very unusual setup (and IMHO a really bad idea in the first place), so a comment in the docs should be enough.