iCloud Private Relay “Custom DNS settings” confused about Apple’s explanation

In Apple “iCloud private relay overview”, can someone explain what precisely Apple’s explanation about “Custom DNS” on page 9 means.  

“Custom DNS settings
If a user has configured custom-encrypted DNS settings using a profile or an
app, the DNS server specified will be used instead of ODoH. Safari connections
and all unencrypted HTTP connections will also resolve names using the
specified DNS server prior to routing through Private Relay.
An unencrypted DNS server provided by a local network or manually edited
in Settings (iOS) or System Preferences (macOS) will not be used for iCloud
Private Relay traffic.“

I have attached the PDF.

I’m not sure I understand it correctly.  I understand it as such that if I were to install the NextDNS profile, or from app it would work, taking precedence and handle the DNS queries. But when I login to NextDNS I only see a red dot, saying “This device is currently using ”iCloud Private Relay” as DNS resolver.”

Which leaves me confused about what apple states in the PDF.