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Need to clarify something:
Most documentation mentions that EIGRP distribute-lists will stop query propagation? Is that also true for distribute-list out or only for distribute-list in? I.e if there is distribute-list out on particular interface, NO update for route will be sent and NO query for that route will be sent there too?
Yes, the distribute-list out is for suppressing routes from being advertised in updates. Addresses not specified in the distribute-list command will not be advertised in outgoing routing updates.
Here the command reference guide:
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