Apple container CLI configures internal domains (`container system dns`) by adding an internal resolver and it worked for me when I specified an actual domain previously handled by external DNS and it showed up as a custom resolver.

Here’s a GitHub comment showing someone on MacOS 26 with a `.test` domain, which you claim is broken: https://github.com/apple/container/issues/856#issuecomment-3... —- maybe you are configuring it incorrectly.