Simple AD forwards DNS requests to the IP address of the Amazon-provided DNS servers for your VPC. These DNS servers will resolve names configured in your Route 53 private hosted zones. By pointing your on-premises computers to your Simple AD, you can now resolve DNS requests to the private hosted zone.
Note that to enable your Simple AD to respond to external DNS queries, the network access control list (ACL) for the VPC containing your Simple AD must be configured to allow traffic from outside the VPC.
If you are not using Route 53 private hosted zones, your DNS requests will be forwarded to public DNS servers.
If you're using custom DNS servers that are outside of your VPC and you want to use private DNS, you must reconfigure to use custom DNS servers on EC2 instances within your VPC. For more information, see Working with Private Hosted Zones.
If you want your Simple AD to resolve names using both DNS servers within your VPC and private DNS servers outside of your VPC, you can do this using a DHCP options set. For a detailed example, see this article.
For more information on Route 53, see What is Route 53.