If pi hole is configured to use another DNS it will still forward your request, just not to your ISP DNS server. Essentially you’re providing your DNS requests to a 3rd party, for a slight boost to performance (because they’ll have tons of stuff cached and can do recursive queries faster if you’re requesting a site not in their cache.) Your web pages will load faster because you don’t have an SBC trying to manually figure out what’s the IP for bigfuckdaddyhairbrushemporium.net

The downside is you’re exposing your DNS queries to a 3rd party and it’s a bit of a privacy hit, as the upstream DNS server you select has your public IP correlated with your DNS requests. Doesn’t really matter to most, but it does for some.