With "router", clients will use the DNS server from the router's WAN settings, and will not be able to bypass it - they will be forced to use it.
With "none", clients will use the DNS server from the router's WAN settings, but they will also be able to specify their own DNS servers in their local network configuration.
With .40, no matter what settings I use (DNS filter disabled, DNS filter enabled > Global:None, Client:None) I can't specify my own DNS servers on client machines. All DNS traffic is filtered regardless of filter setting. I can query the router directly. Rebooting did not help. Going back to .39 resolves the issue.
I played with the DNS filter when .39 was released, but I shut it off because I didn't need it. There may be residual settings. I did not try factory reset as I'm accessing my network remotely at this time.
RT-AC66U