Check your system log when you restart dnsmasq, it will provide some feedback as to what happens with your custom configuration.
Could you check these if you can see what's wrong. Here's the system log after the dnsmasq restart:
May 16 13:27:47 rc_service: service 4189:notify_rc restart_dnsmasq
May 16 13:27:48 dnsmasq[462]: exiting on receipt of SIGTERM
May 16 13:27:48 custom config: Appending content of /jffs/configs/dnsmasq.conf.add.
May 16 13:27:48 dnsmasq[4194]: started, version 2.73rc1 cachesize 1500
May 16 13:27:48 dnsmasq[4194]: warning: interface ppp1* does not currently exist
May 16 13:27:48 dnsmasq[4194]: asynchronous logging enabled, queue limit is 5 messages
May 16 13:27:48 dnsmasq-dhcp[4194]: DHCP, IP range 192.168.11.100 -- 192.168.11.254, lease time 1d
May 16 13:27:48 dnsmasq[4194]: using nameserver 64.145.73.2#53 for domain bbc.co.uk
May 16 13:27:48 dnsmasq[4194]: using nameserver 209.107.219.3#53 for domain bbc.co.uk
May 16 13:27:48 dnsmasq[4194]: using nameserver 64.145.73.2#53 for domain netflix.com
May 16 13:27:48 dnsmasq[4194]: using nameserver 209.107.219.3#53 for domain netflix.com
May 16 13:27:48 dnsmasq[4194]: using nameserver 64.145.73.2#53 for domain overplay.net
May 16 13:27:48 dnsmasq[4194]: using nameserver 209.107.219.3#53 for domain overplay.net
May 16 13:27:48 dnsmasq[4194]: read /etc/hosts - 5 addresses
May 16 13:27:48 dnsmasq[4194]: read /etc/hosts.dnsmasq - 12 addresses
May 16 13:27:48 dnsmasq-dhcp[4194]: read /etc/ethers - 12 addresses
May 16 13:27:48 dnsmasq[4194]: using nameserver 62.241.198.245#53 for domain local
May 16 13:27:48 dnsmasq[4194]: using nameserver 62.241.198.246#53 for domain local
May 16 13:27:48 dnsmasq[4194]: using nameserver 64.145.73.2#53 for domain bbc.co.uk
May 16 13:27:48 dnsmasq[4194]: using nameserver 209.107.219.3#53 for domain bbc.co.uk
May 16 13:27:48 dnsmasq[4194]: using nameserver 64.145.73.2#53 for domain netflix.com
May 16 13:27:48 dnsmasq[4194]: using nameserver 209.107.219.3#53 for domain netflix.com
May 16 13:27:48 dnsmasq[4194]: using nameserver 64.145.73.2#53 for domain overplay.net
May 16 13:27:48 dnsmasq[4194]: using nameserver 209.107.219.3#53 for domain overplay.net
May 16 13:27:48 dnsmasq[4194]: using nameserver 62.241.198.246#53
May 16 13:27:48 dnsmasq[4194]: using nameserver 62.241.198.245#53
And here's the content of /etc/dnsmasq.conf:
user=nobody
bind-dynamic
interface=br0
interface=ppp1*
no-dhcp-interface=ppp1*
resolv-file=/tmp/resolv.conf
servers-file=/tmp/resolv.dnsmasq
no-poll
no-negcache
cache-size=1500
min-port=4096
dhcp-range=lan,192.168.11.100,192.168.11.254,255.255.255.0,86400s
dhcp-option=lan,3,192.168.11.1
dhcp-option=lan,252,"\n"
dhcp-authoritative
read-ethers
addn-hosts=/etc/hosts.dnsmasq
server=/overplay.net/209.107.219.3
server=/overplay.net/64.145.73.2
server=/netflix.com/209.107.219.3
server=/netflix.com/64.145.73.2
server=/bbc.co.uk/209.107.219.3
server=/bbc.co.uk/64.145.73.2