If a container is called mytest, then inside a container I can address this container as mytest.incus. This hostname resolves.
The way this is achieved, is by Incus invoking dnsmasq with the -s incus parameter.
What’s the proper way to change the domain to something else?
To change the domain from the default .incus to .container (as an example), run the following. Assumes that the managed network interface is called incusbr0.
incus network set incusbr0 dns.domain=container
As soon as you run the command, the dnsmasq of Incus is serving the new domain for the containers.