But legitimate DNS request would also be dropped. The problem is there are bad URLs out there that serve adware and are used by products like this TV to send user data. At the same time there are good URLs that this TV may use. Just dropping all DNS traffic isn't a good solution.
What this Pi-hole does is it keeps a list of the bad URLs and drops DNS request for those URLs while letting good ones go through. The added benefit is that it acts as a network wide adblocker.
I guess this really is a feature meant for a stand alone DNS server and it's crazy of me to expect it from a router.