From the authors site :
Dnsmasq is a lightweight, easy to configure DNS forwarder and DHCP
server. It is designed to provide DNS and, optionally, DHCP, to a
small network. It can serve the names of local machines which are not
in the global DNS. The DHCP server integrates with the DNS server and
allows machines with DHCP-allocated addresses to appear in the DNS
with names configured either in each host or in a central
configuration file. Dnsmasq supports static and dynamic DHCP leases
and BOOTP/TFTP/PXE for network booting of diskless machines.
So the answer is, no, you can't use dnsmasq as a content filter. Unless you only intend to maintain a blacklist of domains so dnsmasq
will not forward them at all. But of course you can do this with any DNS server, I wouldn't call this a content filter.
You can maintain a hosts file in dnsmasq and map all of them to 127.0.0.1, the parameter to use is --addn-host=samplehostsfile.txt
.