I often have a dev server running bound to 0.0.0.0 as it makes debugging easy at home on the LAN, but then if I connect to a public WiFi I want to know that I am secure and the ports are closed. "Block all incoming connections" on macOS has failed me before when I've tested it.
Just FYI: LittleSnitch pre-resolves DNS entries BEFORE you click `Accept/Deny`, if you care & understand this potential security issue. Your upstream provider still knows whether you denied a query. Easily verifiable with a PiHole (&c).
I liken the comparison to disk RAIDs: a RAID is not a true backup; LittleSnitch is not a true firewall.
You need isolated hardware for true inbound/outbound protection.
This also feels like an exfil route? Are DNS queries (no tcp connect) logged/blocked?
No, not with LittleSnitch (neither in/out-bound).
When you see the LittleSnitch dialogue (asking to `Accept/Deny`), whatever hostname is there has already been pre-resolved by upstream DNS provider (does not matter which option you select). This software pares well with a PiHole (for easy layperson installs), but even then is insufficient for OP's attack.