When editing /etc/lxc/dnsmasq.conf, changes do not take effect right away.
So first shutdown all your containers (Aug 2016, there is an issue that lxc-net does not restart unless all containers are shut off). Then restart lxc-net,
# Tried this and it did noot work http://seminar.io/2014/07/27/dns-resolution-for-lxc-in-ubuntu-trusty/ sudo service lxc-net stop sudo service lxc-net start
The other option is to shutdown all containers and restart the host operating system.