I have been looking for an answer to that question (the one in the title) and the best thing I've found was:
In DNS Protocol design, UDP transport Block size (payload size) has
been limited to 512-Bytes to optimize performance whilst generating
minimal network traffic.
my question is: how exactly does this enhance performance and are there any other reasons for this limitation when using UDP ?
Best Answer
The 512 byte payload guarantees that DNS packets can be reassembled if fragmented in transit. Also, generally speaking there's less chance of smaller packets being randomly dropped.
The IPv4 standard specifies that every host must be able to reassemble packets of 576 bytes or less. With an IPv4 header (20 bytes, though it can be as high as 60 bytes w/ options) and an 8 byte UDP header, a DNS packet with a 512 byte payload will be smaller than 576 bytes.
As @RyanRies says: DNS can use TCP for larger payloads and for zone transfers and DNSSEC. There's a lot more latency when TCP comes into play because, unlike UDP, there's a handshake between the client and server before any data begins to flow.