Is there a downside to always updating DNS from DHCP?

Is there a downside to selecting Always dynamically update DNS A and PTR records?

It depends on what you want to do.

By default, a Windows machine will speak directly to DNS and update its own A record, and it will ask DHCP to update the PTR record.

By enabling Always dynamically update DNS A and PTR records you are telling DHCP to update both records even if the client only asks it to update the PTR.

What's the difference between that and "...for DHCP clients that do not request updates..."

The NT 4.0 example isn't so relevant these days, so consider a mixed environment where you have Windows and Mac (or Linux) clients.

The Windows machines handle their dynamic DNS updates (or they ask DHCP to do so).

But the Mac/Linux clients do not. This option allows DHCP to create records for these machines which do not or cannot request dynamic DNS updates.

Some things to consider:

• You should create a dedicated, non-privileged AD user account for DHCP to use for dynamic DNS updates, and add it to the DnsUpdateProxy group (this is especially important if DHCP runs on a domain controller).
• DHCP always registers the name reported by the client, even if you set up a reservation. If the client reports a name different than the one you set in the reservation, the reservation's name will be overwritten.
• Dynamic DNS records set via DHCP will have a timestamp set on them. You should properly set up DNS scavenging to delete these records, even if you have DHCP set to remove records when the lease expires (it's good to have that on, but there are many cases where this just doesn't happen).