@Yogesh Sharma Thank you for your detailed reply.
My sandbox just completed DNS verification and I am encountering the same issue as you. Documentation specifically states, "External endpoints are used for IPv4/IPv6 addresses, FQDNs, or for services hosted outside Azure. Theses services can either be on-premises or with a different hosting provider." Just below that part of the document, it lists the services formally supported within Azure.
Azure endpoints are used for Azure-based services in Traffic Manager. The following Azure resource types are supported:
PaaS cloud services.
Web Apps
Web App Slots
PublicIPAddress resources (which can be connected to VMs either directly or via an Azure Load Balancer). The publicIpAddress must have a DNS name assigned to be used in a Traffic Manager profile.
Please note that Static Web Apps is a different product with a different underlying architecture than Web Apps and Static Web Apps does not currently support Public IP addresses.
We apologize but Static Web Apps are not supported with ATM at this time as there is no official Azure endpoint. There are two other options that we are going to suggest below but we understand your interest in ATM. You can request Static Web Apps to be added to ATM on Azure Feedback, which the product group watches for future product ideas.
With that being said, there are two other routes we can think of. We would suggest that you consider using enterprise-edge, which is a built in feature now within Static Web Apps that offers global balancing of your site with little to no additional configuration required by you. Please see here and here for additional information.
If you want further control or your project requirements limits you from using a preview feature, you will likely need to use Azure Front Door service directly, which has documentation and provides similar load balancing features. Azure Front Door offers many services but one of them is load balancing. This will require more manual configuration but give you greater control than the enterprise-edge feature that is built into Azure Static Web Apps.
I was not able to find any first party documentation to highlight the load balancing features but this 3rd party blog does a good job explaining the possibilities available within Azure Front Door.
Please let us know if you have any further questions or concerns.