This is the way. Been running (basically) this for years and genuinely keep my eye out for any simpler suggestions, but nothing comes close.

I do it slightly different where I use an external DNS (bunny) and point the A records to the tailscale IP of the server running Caddy.

The benefits are:

• I don’t force the whole house to rely on my local DNS setup.
• Nothing breaks when I change routers and mess up IP mappings (which I was doing a lot, but I finally got some nice unifi equipment, so maybe I don’t have to worry about that anymore).
• I don’t “leak my LAN configuration” to public DNS but I don’t care about that anymore.
• I can use Tailscale DNS override if I want just my tailnet devices to go through some private/premium DNS resolver.
• Don’t need to set up subnet routing in Tailscale

The downside is it doesn’t work at all for devices not on Tailscale. Real bummer when, like, I want my smart TV to just be able to find jellyfin on my LAN with the same domain names. But everything else about it is very convenient.