This issue is a result of the jail that sysntpd runs in. The problem is that the /etc/resolv.conf within the jail does not get updated (i.e. it stays fixed at whatever it was when the service was started). It works despite that when dnsmasq is enabled, because /etc/resolv.conf doesn't change in this case (it is configured to use the dnsmasq listening on localhost)..
See #10389 for a slightly more detailed description of the actual issue, and #10843 for further discussion on this particular symptom.