Describe the solution you'd like
I'd like an option to filter out quests that are not in the zone I'm in.

For example, if I am in Darkshore, show only quests for Darkshore.

The option is already available, it's located in quest block.

Ah, I see. I didn't see that before. Thanks.

However, it doesn't appear to be working properly. I turned it on in Drustvar, and it's showing quests from Tiragarde Sound, and Skinning quests that are not in Drustvar.

Yes, I confirm this option is not working as intended.

I checked the code a bit and to make it work again in v1.2.1-release you may want to change line 327 in EskaTracker_Objectives\Modules\Quests.lua,
from:

if Settings:Get(SHOW_ONLY_QUESTS_IN_ZONE_SETTING) and not isLocal and not blockUsed == "instance-quest-block" then

to

if Settings:Get(SHOW_ONLY_QUESTS_IN_ZONE_SETTING) and not isLocal and blockUsed ~= "instance-quest-block" then

and then in my environment it seems to work again.