VLAN 1 is just there for the local device because when you enable bridge-VLANs, all interfaces must be associated with a VLAN (br-lan.x where x is the VLAN ID). Using VLAN1 (or really it could be any abitrary VLAN ID that is not used elsewhere) works because we're associating it with an untagged network coming from the upstream router).
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Thanks! 