Some additional technical details regarding this setup (from Apple’s iCloud Private Relay Overview paper):
Custom DNS settings
If a user has configured custom-encrypted DNS settings using a profile or an
app, the DNS server specified will be used instead of ODoH. Safari connections
and all unencrypted HTTP connections will also resolve names using the
specified DNS server prior to routing through Private Relay.
An unencrypted DNS server provided by a local network or manually edited
in Settings (iOS) or System Preferences (macOS) will not be used for iCloud
Private Relay traffic