Blogger has acknowledged that the option to have a naked domain redirect to 'www' is currently not functional for some Blogger users as at the time of publishing this post. Blogger stated in a post on Known Issues for Blogger, that they are are working on a fix and hope to have it resolved shortly.
Hence, if you still see "error 404" when you view the naked domain of your custom domain in a web browser, even after ticking the "redirect" option in Blogger settings, it simply means you are one of the victims.
So, What is The Solution?
While waiting for Blogger to fix the problem, you can go ahead to add the second CNAME to your DNS settings as explained here.
If done successfully, your naked domain (without "www") will start redirecting to the "www".
I hope this works for you.
If you continue to experience difficulty mapping your domain, please visit the Blogger Product Forum for guidance.
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