That setting is misleading. It just toggles whether DNS resolution happens on client side (the machine the browser is running on) or on SOCKS server side. As the SSH client acts as SOCKS server and as the SSH client usually runs on the same machine as the browser, this setting doesn't make any difference when using SSH as SOCKS proxy!
When using SOCKS over SSH and running the SSH client on your local machine, DNS resolution will always happen on you local machine as well (except when using DoH of course)!
It might seem misleading if you're using ssh as a SOCKS proxy, but there are many other SOCKS proxies for which the setting makes sense. For example, if you're using tor as a SOCKS proxy, then that setting is the only way to have the browser resolve .onion addresses.
When using SOCKS over SSH and running the SSH client on your local machine, DNS resolution will always happen on you local machine as well (except when using DoH of course)!