I see this was originally reported two years ago and there has been no change - so I thought it might be worth repeating it as it did waste some of my time....
The documentation says the config file is /usr/local/etc/dnsmasq.conf. In practice dnsmasq looks for /etc/dnsmasq.conf. I know there was a philosophical discussion about which was the right location for the file, but, whatever the outcome of that, the documentation and the application should agree as to its location.
What doesn't help matters is that the application does not complain about the absence of the .conf file. Following the TC documentation I created my initial version in /usr/local/etc, ran dnsmasq --test which came back with a "syntax ok"....but then nothing worked which had me scratching my head for a while.