These days EDNS0 allows bigger UDP responses in many cases, which may mean some fragment re-assembly. Unfortunately there are a staggering number of networks and firewalls that don't open TCP 53, and also ones that don't permit UDP fragments. So if you want DNS to work reliably /everywhere/, sadly it's wise to stay below the 512 limit.

We're talking about service discovery here. This is internal DNS traffic in AWS, where these issues to which you refer are nonexistent.