If /etc/resolv.conf contains nameserver 127.0.0.1 and the nameserver running on 127.0.0.1 is the Knot Resolver instance bootstrapping the root TA, then the bootstrapping fails with name resolution error as it doesn't start resolving until the root TA is bootstrapped.

Knot Resolver should be able to resolve at least data.iana.org when doing the bootstrap and it should probably fail to start if it can't bootstrap root TA.