Answer by Sergiy Kolodyazhnyy for ISP DNS Server used Instead of Local DNS

From the above output, it looks like Ubuntu is trying to use a local DNS server. Correct? Is it caching a failed lookup on my local machine?

Yes, Ubuntu is using whatever was provided with dhcp lease, more specifically dnsmasq, a plug-in, that takes care of that for network-manager.

Is Ubuntu using this second DNS server sometimes? Why? Is it load balancing? Is the local one slower?

If the first dns fails to resolve, then dnsmasq should redirect the query to the secondary dns. At least that's the idea.

In case you'd like to use your own dns-server Personally, I always use supersede domain-name-server xxx.xx.xxx.xxx in /etc/dhcp/dhclient.conf to tell my Ubuntu system to replace whatever dns it receives via dhcp lease with my own server. Here's the excerpt from that file:

30)serg@ubuntu[/home/xieerqi]
>_ cat /etc/dhcp/dhclient.conf                                                 
# Configuration file for /sbin/dhclient, which is included in Debian's
#   dhcp3-client package.
#
# This is a sample configuration file for dhclient. See dhclient.conf's
#   man page for more information about the syntax of this file
#   and a more comprehensive list of the parameters understood by
#   dhclient.
#
# Normally, if the DHCP server provides reasonable information and does
#   not leave anything out (like the domain name, for example), then
#   few changes must be made to this file, if any.
#

option rfc3442-classless-static-routes code 121 = array of unsigned integer 8;

#send host-name "andare.fugue.com";
send host-name = gethostname();
#send dhcp-client-identifier 1:0:a0:24:ab:fb:9c;
#send dhcp-lease-time 3600;
#supersede domain-name "fugue.com home.vix.com";
supersede domain-name-servers 208.67.220.220;
#prepend domain-name-servers 127.0.0.1;
request subnet-mask, broadcast-address, time-offset, routers,
    domain-name, domain-name-servers, domain-search, host-name,
    dhcp6.name-servers, dhcp6.domain-search,
    netbios-name-servers, netbios-scope, interface-mtu,
    rfc3442-classless-static-routes, ntp-servers,
    dhcp6.fqdn, dhcp6.sntp-servers;

After setting that up and reconnecting or restarting network-manager, here's what I have:

31)serg@ubuntu[/home/xieerqi]
>_ nmcli dev list | grep -i dns                                                
IP4.DNS[1]:                             208.67.220.220

Nslookup will report Server: 127.0.1.1 and Address: 127.0.1.1#53 since it is Network-Manager's dsnmasq that listens on that address, and it uses whatever was provided by dhcp ( in this case , the substituted dns)