Multi host flat DHCP networking and local DNS resolving

At the moment I have a multi host environment (1 controller node and multiple compute node with each it own nova-network) with flat DHCP networking running and all works fine except dns resolving between instances on different compute nodes.

For example assume that there are 3 instances running (call them x, y and z) and 2 of them run on compute node A (x,y) and the third instance (z) runs on node B. The nodes x and y can access each other via their assigned DNS names (respectively x.novalocal and y.novalocal) but the nodes can not resolve the dns for the third node (z.novalocal).

Problem here is that each compute node has his own dnsmasq and mange its own local dns entries but other compute nodes does not know how to access this information.

Is their any support for this and did I miss some configuration options or do I need to setup a top level dns that can query all the compute nodes?