Depends on how you do it and what you need from it. I’ve actually moved on from my Pihole instance, for reasons I’ll get into later.
The broad appeal of using Pihole for DNS in a homelab is the ability to route services from domain names on the local host. This can be really useful, especially for “hacking” service availability onto other unintended devices. Additionally, it can be nice for less tech-savvy users who might not be comfortable editing /etc/hosts or just want to check out a service on their phone web browser.
I would generally recommend using an isolated device for Pihole needs; If you’re doing work on your home server, you’ll probably want all users on your service to keep their internet connection working to not be a burden to others living in your household (if you have others). A raspberry pi is a really good target for a pihole, and even a cheap old/used one from the interwebs can serve you well (I was using one recently on a pi3b and it was no issue.) Keep in mind that you can’t really do fallback dns configuration unless you’re ok with losing the key feature of pihole (blocking ads and redirecting domains). Notably, I’m actually not a proponent of running all services on individual compute units generally, I just think DNS is special and you don’t really want to tie it into docker services to keep a separation between the services and the server, so to speak.
This brings me to the second feature: adblocking. This one is really a mixed bag. Ultimately, I turned this feature off only because it doesn’t work for the websites that have arguably the most ad content (youtube, twitch) and really only serves to hurt the smaller players. Sometimes it’s great for blocking things like SmartTV advertisements or data encroachments, but it’s very hard to block ads from a web domain in a way that doesn’t outright block the service itself (so blocking youtube ads without blocking youtube is, seemingly, a fools errand.) I’m willing to hear other people’s opinion on this, I just couldn’t get this working to a satisfactory degree.
I’ve abandoned Pihole as a local dns resolver. This is because Tailscale suits my needs and also allows me out-of-house connectivity to things like my music or personal data so my phone never goes out of communication with my home network. When you use tailscale at home, it’s generally really good about routing that through your local network instead of the relay, so there shouldn’t be that many downsides. Note, I say generally, because there have been times where it goes through a relay unexpectedly which I haven’t solved yet (this is likely a local router configuration issue, anyway…)
I notice that you’re already familiar with Pihole, but just thought that it would be best to “explain” my thoughts on it in the form of a recommendation/editorial form.
I mean, it seems like Pihole is generally talked about first as a “ad filter” when it’s discussed online and second as a dns resolver. But either way, just saying that the use for that is pretty much overblown and not worth actually trying for a smart tv, for example, where you can’t normally block ads anyway. (Might be nice for preventing software updates, though.)