gitlab-ci-local: docker:dind service failure

Minimal .gitlab-ci.yml illustrating the issue

---
stages:
  - build

build-dev:
  image: docker:latest
  stage: build
  services:
    - docker:dind
  script:
    - docker login -u $CI_REGISTRY_USER -p $CI_REGISTRY_PASSWORD registry.gitlab.com

Expected behavior https://gitlab.com/niki9796dk/gitlab-ci-local-debugging/-/jobs/1731462426

Host information Ubuntu 20.04.2 LTS gitlab-ci-local 4.25.1

Additional context gitlab ci local console dump

parsing and downloads finished in 55 ms
build               starting docker:latest (build)
build               pulled docker:latest in 61 ms
build               pulled docker:dind in 66 ms
build               started service image: docker:dind with aliases: docker, docker in 567 ms
build               copied to container in 1.36 s
build               copied artifacts to container in 1.91 s
build               $ docker login -u $CI_REGISTRY_USER -p $CI_REGISTRY_PASSWORD registry.gitlab.com
build               > WARNING! Using --password via the CLI is insecure. Use --password-stdin.
build               > still running...
build               > error during connect: Post "http://docker:2375/v1.24/auth": dial tcp: lookup docker: Try again
build               finished in 26 s  FAIL 1  

 FAIL  build