When DNS Proxy is enabled on an interface, the device needs to push the interface IP as a DNS server address to clients, so the DHCP server must be configured manually, using the interface address as the DNS Server 1 address in the DHCP Server settings on DNS/WINS. The Interface Pre-Populate option in the Dynamic Range Configuration dialog makes this easy to configure; if the selected interface has enabled DNS Proxy, the DNS server IP is added automatically into the DNS/WINS page. For more information about configuring the DHCP server, refer to Configuring DNS Settings.
Configure DNS Proxy on the POLICY | Rules and Policies> DNS Policy page. Navigate to NETWORK | System> DHCP Server, you have to manually configure the interface IP as DNS server in DHCP Server Lease Scope tab. Click Add Dynamic.
In the Dynamic Range Configuration dialog, enable Specify manually option and the DNS server IP is added manually into the DNS/WINS page. For more information about configuring the DHCP server, refer to Configuring DNS Settings.