Help with Wireguard routing to the Internet

I have recently upgraded my router to a Xiaomi AX3600 and installed OpenWrt in the first day. Then I have set up Wireguard sucessfully and today I finally configured VLANs for LAN and IOT and extended these to a Xiaomi 4A Gigabit Edition V2 acting as a "dumb AP". In addition to that, I wanted to have different domain names in each of the VLANs, since everything was getting the 'lan' domain suffix. Therefore, I applied the suggestion in the docs Multiple DHCP/DNS server/forwarder instances, just changing 'guest' to 'iot' to match my usecase. Turned out this ended up causing Wireguard peers to have no more access to the Internet. Reverting the DHCP/DNS changes back to default solved this, so this is indeed a DNS issue and not a firewall issue. Anyone has similar setup that can guide me through?