Comment 6 for bug 231060

The problem is not really in libvirt, which calls dnsmasq with the appropriate settings to limit itself to the right interface. It's in dnsmasq, which by default binds to all interfaces, thus preventing the dnsmasq-from-libvirt from serving its addresses.

I tend to agree with Soren and Neal : yes, that's a conflict configuration case (like if you install two web servers that try to run on the same port), and yes, since it's not that obvious that libvirt runs a DHCP server, we should try to make the potential problem (and solution) more discoverable by documentation.