The thing is, 127.0.0.53 is a fallback. The real default upstream is nss_resolve, which talks to systemd-resolved via non-DNS protocol on a UNIX-domain socket. Ubuntu disabled this in favor of the less-featured fallback. If you insist on sniffing DNS, you need to add instructions to disable the native nss_resolve module by not including it in /etc/nsswitch.conf.

If I don't know who my machine is talking to, the information is not very useful. So there needs to be a fallback on some level.

Perhaps there should be a mode where littlesnitch just does its own lookup using the system-configured rDNS, for example from the ui or for specific processes, etc? It should be cached if it is a recent lookup, so minimal performance implications; and offloaded to the system rDNS resolver, so minimal instruction set.

Not all "hostname lookups" by applications happen over DNS (or the DNS is done by something like systemd-resolved, which is often using encrypted lookups), so in many cases, depending on NSS configuration (e.g. 'file', 'resolve', 'db', 'nis', 'mymachines', 'libvirt', 'winbind', ...) this would never work?

I'm curious, why not do things like the DNS look-up from userspace?