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When one configures an "isolated" network with virtual-manager, dnsmasq sends a default route in the DHCP response. It shouldn't. It's an isolated network. It should still provide a route for NAT style networks I think.
I don't think this is virt-manager specific, reassigning to libvirt.
Brian, could you please note libvirt and dnsmasq versions you are experiencing this problem with? Libvirt already adds '--dhcp-option=3' to dnsmasq, which should mean 'no default route'. I've tried to reproduce with libvirt-0.9.3-2.el6.x86_64 and dnsmasq-2.48-4.el6.x86_64 and it really doesn't send default route for isolated network. And could you please show XML of the network? Thanks.
Thanks for the info Michal. Looks like that commit was fairly recent though (released april 2011): http://libvirt.org/git/?p=libvirt.git;a=commit;h=013427e6e733f7a662f4e8a9c11f7dad4cd65e3f Which was also after Brian filed the bug. Closing as UPSTREAM. Brian, if you are using a distro and want this patch, please file a bug with them to backport the above commit.