If you have IPv6 you'll need to disable peerdns in the wan6 section as well so that the DNS advertised by the ISP is not added to the list.
With one instance of dnsmasq there is only one list of default external DNS servers. They are used equally in a round-robin / failover fashion. It doesn't matter where you put a list dns but it makes the most sense to put them in a wan interface configuration block.