I just checked on my GS308T: Since it's a switch, dnsmasq is not installed by default. You need to install dnsmasq for this option to appear.
Regarding performance: There are several threads in this forum that discuss the routing performance of realtek switches, for example:
EDIT: What's the point in assigning both VLANs to the same firewalling zone? Shouldn't your VLAN1 be a wan zone?