In case relevant, gulp, earlier log recorded when ATV DNS was set to automatic (I switched it back from manual as not working). Just changed ATV DNS back to 192.168.1.2 (same as mac) and, as before, ATV unit does not function at all.
Consol log:
11:26:37 DNSServer: DNS request received!
11:26:37 DNSServer: Source: ('192.168.1.97', 53159)
11:26:37 DNSServer: Domain: time.apple.com
11:26:37 DNSServer: ***forward request
11:26:37 DNSServer: -> DNS response from higher level
11:26:37 DNSServer: DNS request received!
11:26:37 DNSServer: Source: ('192.168.1.97', 60111)
11:26:37 DNSServer: Domain: data.iana.org
11:26:37 DNSServer: ***forward request
11:26:37 DNSServer: -> DNS response from higher level
11:26:37 DNSServer: DNS request received!
11:26:37 DNSServer: Source: ('192.168.1.97', 62810)
11:26:37 DNSServer: Domain: ax.init.itunes.apple.com
11:26:37 DNSServer: ***forward request
11:26:37 DNSServer: -> DNS response from higher level
11:26:38 DNSServer: DNS request received!
11:26:38 DNSServer: Source: ('192.168.1.97', 54051)
11:26:38 DNSServer: Domain: itunes.apple.com
11:26:38 DNSServer: ***forward request
11:26:38 DNSServer: -> DNS response from higher level
11:26:38 DNSServer: DNS request received!
11:26:38 DNSServer: Source: ('192.168.1.97', 64199)
11:26:38 DNSServer: Domain: mesu.apple.com
11:26:38 DNSServer: ***forward request
11:26:38 DNSServer: -> DNS response from higher level
11:26:39 DNSServer: DNS request received!
11:26:39 DNSServer: Source: ('192.168.1.97', 57590)
11:26:39 DNSServer: Domain: p42-buy.itunes.apple.com
11:26:39 DNSServer: ***forward request
11:26:39 DNSServer: -> DNS response from higher level
11:26:39 DNSServer: DNS request received!
11:26:39 DNSServer: Source: ('192.168.1.97', 52601)
11:26:39 DNSServer: Domain: local
11:26:39 DNSServer: ***forward request
11:26:39 DNSServer: -> DNS response from higher level
11:26:44 DNSServer: DNS request received!
11:26:44 DNSServer: Source: ('192.168.1.97', 56357)
11:26:44 DNSServer: Domain: init.itunes.apple.com
11:26:44 DNSServer: ***forward request
11:26:44 DNSServer: -> DNS response from higher level
11:26:44 DNSServer: DNS request received!
11:26:44 DNSServer: Source: ('192.168.1.97', 57591)
11:26:44 DNSServer: Domain: init-p01st.push.apple.com
11:26:44 DNSServer: ***forward request
11:26:44 DNSServer: -> DNS response from higher level
11:26:44 DNSServer: DNS request received!
11:26:44 DNSServer: Source: ('192.168.1.97', 61770)
11:26:44 DNSServer: Domain: configuration.apple.com
11:26:44 DNSServer: ***forward request
11:26:44 DNSServer: -> DNS response from higher level
11:26:44 DNSServer: DNS request received!
11:26:44 DNSServer: Source: ('192.168.1.97', 51263)
11:26:44 DNSServer: Domain: 49-courier.push.apple.com
11:26:44 DNSServer: ***forward request
11:26:44 DNSServer: -> DNS response from higher level
11:26:45 DNSServer: DNS request received!
11:26:45 DNSServer: Source: ('192.168.1.97', 60875)
11:26:45 DNSServer: Domain: pd-st.itunes.apple.com
11:26:45 DNSServer: ***forward request
11:26:45 DNSServer: -> DNS response from higher level
11:26:56 DNSServer: DNS request received!
11:26:56 DNSServer: Source: ('192.168.1.97', 59479)
11:26:56 DNSServer: Domain: trailers.apple.com
11:26:56 DNSServer: ***intercept request
11:26:56 DNSServer: -> DNS response: 192.168.1.70
11:29:09 DNSServer: DNS request received!
11:29:09 DNSServer: Source: ('192.168.1.97', 57875)
11:29:09 DNSServer: Domain: bookkeeper.itunes.apple.com
11:29:09 DNSServer: ***forward request
11:29:09 DNSServer: -> DNS response from higher level
11:29:10 DNSServer: DNS request received!
11:29:10 DNSServer: Source: ('192.168.1.97', 57117)
11:29:10 DNSServer: Domain: upp.itunes.apple.com
11:29:10 DNSServer: ***forward request
11:29:10 DNSServer: -> DNS response from higher level
11:31:38 DNSServer: DNS request received!
11:31:38 DNSServer: Source: ('192.168.1.97', 61786)
11:31:38 DNSServer: Domain: a97.gi3.akamai.net
11:31:38 DNSServer: ***forward request
11:31:38 DNSServer: -> DNS response from higher level
11:39:45 PlexConnect: Shutting down.
11:39:48 DNSServer: Shutting down.
11:39:49 WebServer: Shutting down.