DNS Server 2 = ISP DNS Service, OpenDNS, your router whatever
when pi-hole blocks the ad's DNS query, macOS will treat that as a DNS failure and use DNS Server 2 as a fallback. Resulting in the ad being shown.
Doing (A) was my first attempt and at least using a Ubiquiti router, if Pi-hole blocked a DNS query it would always fallback to the secondary DNS server. In my environment, the only way I was able to get pi-hole to work consistently was to set the pi-hole server as the only DNS server in the DHCP server.
DNS Server 1 = Pi-Hole
DNS Server 2 = ISP DNS Service, OpenDNS, your router whatever
when pi-hole blocks the ad's DNS query, macOS will treat that as a DNS failure and use DNS Server 2 as a fallback. Resulting in the ad being shown.
Doing (A) was my first attempt and at least using a Ubiquiti router, if Pi-hole blocked a DNS query it would always fallback to the secondary DNS server. In my environment, the only way I was able to get pi-hole to work consistently was to set the pi-hole server as the only DNS server in the DHCP server.