The issue is with the container post-upgrade (bullseye > bookworm). Started a new ubunutu jammy instance and it has working dns. So for now I am just going to re-configure that one, reboot, & hope it sticks.
Seems like the issue (if you want to reproduce) was regarding the upgrade itself.
EDIT: Ran into another issue (ubuntu jammy container wont start up again after initial startup) - I added the lxc.mount.entry lines to the config after shutting it down. The debian bookworm container starts up with the same entries.