Here is a good explanation from lizzi555. My comments in bold.
DNS Relay means in this case that all your machines send their DNS queries to the relay. So if you have two routers in your home and the first one’s Lan port acts as the source to WAN port of your second router then DNS relay says send all DNS request to your first router NOT your second.
The relay sends the queries to the DNS server of the provider or whatever is set in the router’s WAN settings.
When it receives the answer it sends it back to the machines and stores it for a short time.
So if another machine in your network searches for the same address, it will receive the answer directly from your router without asking internet servers again. (So there is a little memory which remembers the queries – so called: DNS cache)
Please don’t ask how many addresses are stored and how long as D-Link nowhere published these values.
In practice you will not recognize any advantage in speed because it is only some milliseconds if everything with your connection is fine. As most machines have an own DNS cache this small advantage will only apply for the first request from a machine.
But you can use your router’s address for DNS and need only this one address for all your machines.
You don’t need to take care of changing DNS servers or IPs in the internet. Your router will recognize it and do the needed changes.
It is a much easier handling if you use devices with static IP entries.
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