This is still a problem in 18.04. Like the OP, I have localhosts on my
LAN, but have no local domain configured. I had to disable systemd-
resolved on each of my LXC containers. What's worse, resolvconf creates
an empty /etc/resolv.conf file. So I had to create resolv.conf by hand
and point to DNS. Again, on each of my containers.

This is a major regression. If the systemd-resolved is to be kept, at
least have some decency to explicitly note in 18.04 LTS release notes
that local hostname resolution requires local domain to be configured
for name resolution to work.

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https://bugs.launchpad.net/bugs/1699660

Title:
  systemd-resolve breaks resolution of local network hostnames

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