Azure DNS Private Zone Preview not working with ubuntu virtual machines

I need help getting the DNS resolution working using an Azure DNS private Zone.
I followed the documentation here: https://docs.microsoft.com/en-us/azure/dns/private-dns-getstarted-cli

I was able to create the private zone example.local and I created an A record called jump.example.local.
As the documentation tells it to do, I then created 2 VMs Ubuntu 18.04 LTS.
Took one of the IP which is 10.0.1.4 and updated my jump.example.local record with it.

When I am trying to do from the os the following command line I get no result from my A record.

    dig jump.example.local

if I do check my dns resolution configurations I get:

    systemd-resolve --status
    Global
            DNSSEC NTA: 10.in-addr.arpa
                        16.172.in-addr.arpa
                        168.192.in-addr.arpa

                        17.172.in-addr.arpa
                        18.172.in-addr.arpa
                        19.172.in-addr.arpa
                        20.172.in-addr.arpa
                        21.172.in-addr.arpa
                        22.172.in-addr.arpa
                        23.172.in-addr.arpa
                        24.172.in-addr.arpa
                        25.172.in-addr.arpa
                        26.172.in-addr.arpa

                        27.172.in-addr.arpa
                        28.172.in-addr.arpa
                        29.172.in-addr.arpa
                        30.172.in-addr.arpa
                        31.172.in-addr.arpa
                        corp
                        d.f.ip6.arpa
                        home
                        internal
                        intranet

                        lan
                        local
                        private
                        test

    Link 2 (eth0)
        Current Scopes: DNS
        LLMNR setting: yes
    MulticastDNS setting: no
        DNSSEC setting: no

        DNSSEC supported: no
            DNS Servers: 168.63.129.16
            DNS Domain: xqelsdawdufutaole0y2mhw4zb.vx.internal.cloudapp.net

If I use directly in dig the dns servers pointed out by my dns config from the vm, it finds the desired A record.

    dig @168.63.129.16 jump.example.local 

    ; <<>> DiG 9.11.3-1ubuntu1.1-Ubuntu <<>> @168.63.129.16 jump.example.local

    ; (1 server found)
    ;; global options: +cmd
    ;; Got answer:
    ;; WARNING: .local is reserved for Multicast DNS
    ;; You are currently testing what happens when an mDNS query is leaked to DNS
    ;; ->>HEADER<<- opcode: QUERY, status: NOERROR, id: 62699
    ;; flags: qr rd ra; QUERY: 1, ANSWER: 1, AUTHORITY: 0, ADDITIONAL: 1

    ;; OPT PSEUDOSECTION:
    ; EDNS: version: 0, flags:; udp: 4000

    ; COOKIE: 4681bec0bce6fa9e (echoed)
    ;; QUESTION SECTION:
    ;jump.example.local.        IN  A

    ;; ANSWER SECTION:
    jump.example.local. 2042    IN  A   10.0.1.4

    ;; Query time: 1 msec
    ;; SERVER: 168.63.129.16#53(168.63.129.16)
    ;; WHEN: Mon Aug 27 16:11:54 UTC 2018

    ;; MSG SIZE  rcvd: 76

I tried rebooting the VM I am trying to inject the configuration within netplan.
But it doesn't seem to catch up the dns server to use.

the netplan configuration file

    # /etc/netplan/50-cloud-init.yaml
    network:

        version: 2
        ethernets:
            ephemeral:
                dhcp4: true
                match:
                    driver: hv_netvsc
                    name: '!eth0'
                optional: true
            hotpluggedeth0:
                dhcp4: true

                match:
                    driver: hv_netvsc
                    name: 'eth0'
                nameservers:
                    addresses: [168.63.129.16]
                    search: [example.local]

It looks to me that the ubuntu os is not able to catch that the example.local zone should be forwarded to Azure DNS.

Update #1

I though of using another TLD which doesn't exist or is not part of the list the command line systemd-resolve --status returns and I used .xyz instead and this time it worked out without any problem. So it seems to me that I need to figure out the proper netplan configuration to force example.local to be searched against the proper nameserver and not the 127.0.0.53:53 dns name resolver which is started by the systemd-resolve service.

Update #2

Here is the configuration file /etc/netplan/50-cloud-init.yaml.

    # This file is generated from information provided by
    # the datasource.  Changes to it will not persist across an instance.

    # To disable cloud-init's network configuration capabilities, write a file
    # /etc/cloud/cloud.cfg.d/99-disable-network-config.cfg with the following:
    # network: {config: disabled}
    network:
        version: 2
        ethernets:
            eth0:
                dhcp4: true
                match:
                    macaddress: 00:0d:3a:f4:5a:99

                set-name: eth0
                nameservers:
                    addresses: [168.63.129.16]
                    search: [example.local]

Once you edited the file and applied the command line sudo netplan apply it works. I also tried a reboot and the configurations is kept in place. Thanks to @nancy-xiong-msft for the tests.

Answer

It seems that you have figured it out. I also test this using Ubuntu LTS 16 and Ubuntu LTS 18.04. The same scenario of dig vm01.contoso.local without result happened in Ubuntu LTS 18.04. However, It did work in Ubuntu LTS 16. I think this is because of the way Ubuntu manages network interfaces has completely changed.

Also, I add followings to netplan configuration

nameservers:
                    addresses: [168.63.129.16]
                    search: [contoso.local]

Then, run the sudo netplan apply, It is working now.

Ref: Configure Static IP Addresses On Ubuntu 18.04 LTS Server