udhcpc does the requesting of IP address leases (I think you figured this part out), and dnsmasq takes care of name resolution.

As for how they work together:
dnsmasq settings look for a resolv.conf file in a number of places (see /etc/dnsmasq.conf).
if any of those files contains a valid name server, it gets used.

if you look in /etc/udhcpc/default.bound you will notice that udhcpc updates /var/run/resolv.conf once a successful IP assignment has taken place.

dnsmasq dynamically loads the resolv.conf files, so no restart or reload command is needed. That means as soon as udhcpc has chosen a nameserver, it is immediately available for use

Hope this helps

Any specific reason for asking?