I'm on Ubuntu 16.04 Xenial and Network Manager started dnsmasq for me with these options:
~/ ps awux|grep dnsmasq
nobody 2649 0.0 0.0 54488 3588 ? S Mai23 0:00 /usr/sbin/dnsmasq --no-resolv --keep-in-foreground --no-hosts --bind-interfaces --pid-file=/var/run/NetworkManager/dnsmasq.pid --listen-address=127.0.1.1 --cache-size=0 --proxy-dnssec --enable-dbus=org.freedesktop.NetworkManager.dnsmasq --conf-dir=/etc/NetworkManager/dnsmasq.d
I'd like dnsmasq to read/use the /etc/hosts file as well, which it currently doesn't seem to, because of the option --no-hosts.
How do I change the startup options, that Network Manager uses to invoke dnsmasq?