Hello,
first note the change to the correct mailing-list.

I am trying to add wildcard static hints to catch all local domains like 
below. But does not seem to work.

    hints['nextcloud.local'] = '127.0.0.1' # This works fine
    hints['*.local'] = '127.0.0.1'
    hints['.local'] = '127.0.0.1'

DNSMasq supports this like https://stackoverflow.com/a/22551303

Is there way to do this in knot?

No, I don't think there's a good way currently.  The hints module only supports exact names with A and AAAA and corresponding PTR, like in /etc/hosts files.  With our [RPZ] you can do wildcards, but there's no support for positive answers (so you need to do NXDOMAIN or similar denials).

BTW, note that .local is reserved for [mDNS] protocol, in particular kresd might never get to such requests because it's "only" a DNS server:

3. Name resolution APIs and libraries SHOULD recognize these names as special and SHOULD NOT send queries for these names to their configured (unicast) caching DNS server(s).

[RPZ] https://knot-resolver.readthedocs.io/en/stable/modules.html#c.policy.rpz
[mDNS] https://tools.ietf.org/html/rfc6762#section-22.1

--Vladimir