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The dnsmasq man page recommends that dhcp-authoritative "should be set when dnsmasq is definitely the only DHCP server on a network". This is the case for libvirt-managed virtual networks. The effect of this is that VMs that fail to renew their DHCP lease in time (e.g. if the VM or host is suspended) will be able to re-acquire the lease even if it's expired, unless the IP address has been taken by some other host. This avoids various annoyances caused by changing VM IP addresses.
LibVirt : simple API for virtualization
Libvirt is a C toolkit to interact with the virtualization capabilities
of recent versions of Linux (and other OSes). It is free software
available under the GNU Lesser General Public License. Virtualization of
the Linux Operating System means the ability to run multiple instances of
Operating Systems concurrently on a single hardware system where the basic
resources are driven by a Linux instance. The library aim at providing
long term stable C API initially for the Xen paravirtualization but
should be able to integrate other virtualization mechanisms if needed.
Daniel Veillard <veillard@redhat.com>