Something in a recent dnsmasq update broke KVM. I hit the same and found
a workaround that gets me rolling again wtih KVM guests at least....
here's a quick shell summary:

bladernr@galactica:~$ sudo virsh net-start default
error: Failed to start network default
error: internal error: Child process (VIR_BRIDGE_NAME=virbr0 /usr/sbin/dnsmasq 
--conf-file=/var/lib/libvirt/dnsmasq/default.conf --leasefile-ro 
--dhcp-script=/usr/lib/libvirt/libvirt_leaseshelper) unexpected exit status 2: 
dnsmasq: failed to create listening socket for 192.168.123.1: Address already 
in use

bladernr@galactica:~$ sudo virsh net-list
 Name   State   Autostart   Persistent
----------------------------------------

bladernr@galactica:~$ sudo apt-cache policy dnsmasq-base
dnsmasq-base:
  Installed: 2.90-0ubuntu0.23.10.1
  Candidate: 2.90-0ubuntu0.23.10.1
  Version table:
 *** 2.90-0ubuntu0.23.10.1 500
        500 http://archive.ubuntu.com/ubuntu mantic-updates/main amd64 Packages
        500 http://security.ubuntu.com/ubuntu mantic-security/main amd64 
Packages
        100 /var/lib/dpkg/status
     2.89-1 500
        500 http://archive.ubuntu.com/ubuntu mantic/main amd64 Packages

bladernr@galactica:~$ sudo apt install dnsmasq-base=2.89-1
bladernr@galactica:~$ sudo virsh net-start default
Network default started

bladernr@galactica:~$ sudo virsh net-list
 Name      State    Autostart   Persistent
--------------------------------------------
 default   active   yes         yes

as you can see, as a workaround, reverting to the original Mantic
version allows the NAT network to start and I can once again launch KVM
guests on my machine.

-- 
You received this bug notification because you are a member of Ubuntu
Touch seeded packages, which is subscribed to dnsmasq in Ubuntu.
https://bugs.launchpad.net/bugs/2055776

Title:
  After updating ubuntu, the network to which the subnet address is
  assigned does not become active in KVM.

Status in dnsmasq package in Ubuntu:
  Confirmed

Bug description:
  phenomenon:
    After updating ubuntu, the network to which the subnet address is assigned 
does not become active in KVM.

  Cause:
    This is because the following dnsmasq update operation performed by apt's 
automatic update causes an error. It worked properly with dnsmasq 2.80, but 
does not work properly with 2.90.

  $ cat /var/log/apt/history.log
  (snip)
  Start-Date: 2024-02-27  06:17:31
  Commandline: /usr/bin/unattended-upgrade
  Upgrade: dnsmasq-base:amd64 (2.80-1.1ubuntu1.7, 2.90-0ubuntu0.20.04.1)
  End-Date: 2024-02-27  06:17:44
  (snip)
  $

  Cause details:
    As a premise, bind-dynamic is set in the dnsmasq config file for KVM. Below 
is an example.

  $ cat default.conf 
  ##WARNING:  THIS IS AN AUTO-GENERATED FILE. CHANGES TO IT ARE LIKELY TO BE
  ##OVERWRITTEN AND LOST.  Changes to this configuration should be made using:
  ##    virsh net-edit default
  ## or other application using the libvirt API.
  ##
  ## dnsmasq conf file created by libvirt
  strict-order
  user=libvirt-dnsmasq
  pid-file=/run/libvirt/network/default.pid
  except-interface=lo
  bind-dynamic
  interface=virbr0
  dhcp-range=192.168.122.2,192.168.122.254,255.255.255.0
  dhcp-no-override
  dhcp-authoritative
  dhcp-lease-max=253
  dhcp-hostsfile=/var/lib/libvirt/dnsmasq/default.hostsfile
  addn-hosts=/var/lib/libvirt/dnsmasq/default.addnhosts
  $ 

  
  When starting the network with KVM (virsh net-start), dnsmasq started from 
KVM executes the make_sock function twice as shown below.

     $ cat network.c
     (snip)
     1087 static struct listener *create_listeners(union mysockaddr *addr, int 
do_
     1087 tftp, int dienow)
     1088 {
     1089   struct listener *l = NULL;
     1090   int fd = -1, tcpfd = -1, tftpfd = -1;
     1091 
     1092   (void)do_tftp;
     1093 
     1094   if (daemon->port != 0)
     1095     {
     1096       fd = make_sock(addr, SOCK_DGRAM, dienow);
     1097       tcpfd = make_sock(addr, SOCK_STREAM, dienow);
     1098     }
     (snip)

  The following code causes an issue with the update made in dnsmasq
  2.90.

     $ cat network.c
     (snip)
      895 static int make_sock(union mysockaddr *addr, int type, int dienow)
      896 {
      (snip)
      934       if (!option_bool(OPT_CLEVERBIND) || errno != EADDRNOTAVAIL)
      935         {
      936           if (dienow)
      937             die(s, daemon->addrbuff, EC_BADNET);
      938           else
      939             my_syslog(LOG_WARNING, s, daemon->addrbuff, 
strerror(errno))    939 ;
      940         }
      (snip)

  
  function "make_sock" in network.c:1096 binds the socket to 192.168.122.1/24, 
and then make_sock in network.c:1097 tries to bind to the same address. 
However, in network.c:934, when errno==98 occurs, network.c:937 is executed, so 
dnsmasq does not cause a startup error. As a result, virsh net-start fails.

  As a temporary workaround, it will work if you try not to die.

  $ diff -u  network_c_back  network.c 
  --- network_c_back  2024-02-29 15:36:05.156467935 +0000
  +++ network.c 2024-02-29 15:36:38.733324350 +0000
  @@ -934,7 +934,8 @@
         if (!option_bool(OPT_CLEVERBIND) || errno != EADDRNOTAVAIL)
    {
      if (dienow)
  -     die(s, daemon->addrbuff, EC_BADNET);
  +     my_syslog(LOG_WARNING, s, daemon->addrbuff, strerror(errno));
  +     //die(s, daemon->addrbuff, EC_BADNET);
      else
        my_syslog(LOG_WARNING, s, daemon->addrbuff, strerror(errno));
    }
  $ 

  If bind-dynamic is set, it should be modified so that it works even if
  errno==98.

  For reference, in the case of dnsmasq 2.80, the code is as follows, so
  no error occurs.

      network.c
      699 static int make_sock(union mysockaddr *addr, int type, int dienow)
      700 {
      701   int family = addr->sa.sa_family;
      702   int fd, rc, opt = 1;
      (snip)
          715     err:
      716       errsave = errno;
      717       port = prettyprint_addr(addr, daemon->addrbuff);
      718       if (!option_bool(OPT_NOWILD) && !option_bool(OPT_CLEVERBIND))
      719         sprintf(daemon->addrbuff, "port %d", port);
      720       s = _("failed to create listening socket for %s: %s");
      721       
      722       if (fd != -1)
      723         close (fd);
      724         
      725       errno = errsave;
      726 
      727       if (dienow)
      728         {
      729           /* failure to bind addresses given by --listen-address at 
this
      729  point
      730              is OK if we're doing bind-dynamic */
      731           if (!option_bool(OPT_CLEVERBIND))
      732             die(s, daemon->addrbuff, EC_BADNET);
      733         }
      734       else
      735         my_syslog(LOG_WARNING, s, daemon->addrbuff, strerror(errno));
      736       
      737       return -1;
      738     }  

  If bind-dynamic is set (option_bool(OPT_CLEVERBIND)==true), it will
  not die.

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