Verified in 4.7.0-0.nightly-2021-05-01-081439

$ oc get clusterversions.config.openshift.io 
NAME      VERSION                             AVAILABLE   PROGRESSING   SINCE   STATUS
version   4.7.0-0.nightly-2021-05-01-081439   True        False         2m26s   Cluster version is 4.7.0-0.nightly-2021-05-01-081439


# verified bufsize in default DNS
[jechen@jechen ~]$ oc -n openshift-dns get cm/dns-default -oyaml
apiVersion: v1
data:
  Corefile: |
    .:5353 {
        bufsize 1232              <-- verified fix by https://github.com/openshift/cluster-dns-operator/pull/267
        errors
        health {
            lameduck 20s
        }
<--snip-->


# created a test pod as custom DNS server, added custom forwarding into coreDNS, verified bufsize in custom DNS
$ oc create -f https://raw.githubusercontent.com/lihongan/test-dnsmasq/master/test-dnsmasq.json 
pod/test-dnsmasq created

$ oc get pod -owide
NAME           READY   STATUS    RESTARTS   AGE   IP            NODE                                       NOMINATED NODE   READINESS GATES
test-dnsmasq   1/1     Running   0          58s   10.131.0.31   ci-ln-0bskzdt-f76d1-fptks-worker-b-rk66z   <none>           <none>

$ oc edit dns.operator/default 
<--snip-->
spec:
  servers:
  - forwardPlugin:
      upstreams:
      - 10.131.0.31
    name: test
    zones:
    - mytest.ocp
<--snip-->



$ oc get cm dns-default -n openshift-dns -o yaml
apiVersion: v1
data:
  Corefile: |
    # test
    mytest.ocp:5353 {
        forward . 10.131.0.31
        errors
        bufsize 1232                    <-- verified fix by https://github.com/openshift/cluster-dns-operator/pull/267
    }
    .:5353 {
        bufsize 1232                    <-- verified fix by https://github.com/openshift/cluster-dns-operator/pull/267
        errors
        health {
            lameduck 20s
        }
<--snip-->

This bug will be shipped as part of next z-stream release 4.7.11 on May 19th, as 4.7.10 was dropped due to a blocker https://bugzilla.redhat.com/show_bug.cgi?id=1958518.

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory (OpenShift Container Platform 4.7.11 bug fix update), and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://access.redhat.com/errata/RHBA-2021:1550