- Edited
They do two different things. In not a matter of which one is better, it depends on what you're trying to accomplish.
The VPN hides your true IP address, it does your DNS request, and it encrypts your traffic.
What you're doing is using nextDNS to handle the DNS requests instead of your VPN. Running the VPN still encrypts the traffic and hides your real IP (people will only see the IP of the VPN server you're connected to). Its just not handling your DNS requests now.
If you use no VPN or DNS service, then people see your true IP address, your data is not encrypted, and your ISP (internet service provider) handles your DNS request, which means your ISP is seeing what you're doing.
The perk of nextDNS is that you have more control over blocklists/firewall settings (things you can't change in some VPN's). The real perk is that you can view live logs and block telemetry, which you can't do with your VPN (I'll assume). This is done by enabling logs, and watching a live feed of domains that are making connections and blocking what you don't want to connect (excess telemetry, tracking, etc).
Its not bad to use your VPN to handle DNS requests, but it won't allow you to set specific blocks.
I believe what @Ddismount2784 is referring to, is the more specific you make security settings, the easier you are to fingetprint. E.g., this person (although we don't know who they are) is doing this, and we can tell because they connect with very specific settings that are specific to them (browser settings, VPN/DNS settings, etc) (dismount correct me if I'm wrong).