dnsmasq.leases added in trunk r3573 (before noticing comment #5 ;-)
comment #5 means you'll need to add
/var/lib/lxd/networks/*/dnsmasq.hosts r,
After adding this (and reloading the profile), do you see more DENIED
messages?
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https://bugs.launchpad.net/bugs/1634199
Title:
In 16.10, LXD won't work with enforced dsnmasq profile
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