So its been confirmed that its the raw.dnsmasq auth-zone=lxd setting that is causing the problem. See dnsmask process exited prematurely if raw.dnsmasq auth-zone set when using core20 snap · Issue #8905 · lxc/lxd · GitHub issue for more detail.
So its been confirmed that its the raw.dnsmasq auth-zone=lxd setting that is causing the problem. See dnsmask process exited prematurely if raw.dnsmasq auth-zone set when using core20 snap · Issue #8905 · lxc/lxd · GitHub issue for more detail.