When using NextDNS on the router, your options are limited since dnsmasq is only able to send the device MAC address, IP address and configuration ID upstream to NextDNS. They apparently make a unique identifier of that data, and if you hover in the Logs tab over one of those names, you'll see the LAN IP of the device.
Maybe a future update to the website will let you customize those names for display purposes, but when does it cross the line of being a privacy concern? It's one thing that they know device LY39MD requested
www.badsite.com, but do they really need to know it was "Dave's iPad"? Not that NextDNS uses that data, but it gets back to the concept of aggregating too much personal data with one entity.