While retries on DNS resolution failures does not work for cloud-init.service for environments running NetworkManager.service (desktop live ISOs), I have found that the retries work where systemd-networkd is bringing up network config (server live ISOs). This is because cloud-init.service is After=systemd-network-wait-online.service which provides systemd-resolved with viable network interfaces which are up and providing access to functional DNS configuration.
While retries on DNS resolution failures does not work for cloud-init.service for environments running NetworkManager. service (desktop live ISOs), I have found that the retries work where systemd-networkd is bringing up network config (server live ISOs). This is because cloud-init.service is After=systemd- network- wait-online. service which provides systemd-resolved with viable network interfaces which are up and providing access to functional DNS configuration.