This page gives an overview of the DNS capabilities of IPFire.
IPFire employs a DNS proxy that is called unbound - starting with Since 2.19 – Core Update 106 before dnsmasq was used. It receives DNS queries from the local networks and forwards them to DNS servers on the Internet. The responses are cached, thus IP addresses of sites frequently accessed are delivered quickly.
Apart from that, unbound offers a lot more features:
The DNS proxy forwards requests to the name servers that are configured by the ISP (via PPP or DHCP). In some cases, the name servers of the ISPs are not suitable for use by either being too slow, or not supporting features like DNSSEC.
You can easily change the used DNS servers as shown here: