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I discovered an instance of dnsmasq running on my fresh install of xubuntu desktop. The general purpose of dnsmasq is known to be a DNS relay and DHCP server. The running process is reported as follows:

/usr/sbin/dnsmasq --no-resolv --keep-in-foreground --no-hosts --bind-interfaces --pid-file=/var/run/sendsigs.omit.d/ --listen-address= --conf-file=/var/run/nm-dns-dnsmasq.conf --cache-size=0 --proxy-dnssec

Looks like it is spawned by network-manager. Contents of mentioned files are:

#cat /var/run/nm-dns-dnsmasq.conf

In my local network indeed is a DNS server. I cannot understand why this instance of dnsmasq listens on since I see no way to serve DNS relay and DHCP server on interface.

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Looks like a caching DNS server, am I correct? – Lekensteyn May 11 '12 at 17:05
What's the purpose of caching DNS info and make it available for only? – mbaitoff May 11 '12 at 20:05
Apparantly I was wrong, it's done in an attempt to improve latency issues. See this AU question which links to – Lekensteyn May 11 '12 at 20:51
@Lekensteyn: Would you please provide at least a short answer, so I can accept it for my question. – mbaitoff May 12 '12 at 15:50
up vote 3 down vote accepted is the loopback address, it is not accessible by other machines, just the machine itself. According to the post, this dnsmasq instance exists to improve performance by trying multiple DNS servers if one is too slow.

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It is a DNS server and it'd assign IP addresses to machines that request them from your computer. In this case it'd be used by NetworkManager to share your internet connection. Nothing to worry about :)

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Assigning IP addresses is the role of DHCP server, not DNS server. This instance of dnsmasq doesn't play a role of DHCP server, since there's no subnet specification in the configuration file. Moreover, no requests from other machines can arrive from which is the interface this instance is listening on. – mbaitoff May 11 '12 at 0:22

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