A group of Microsoft Products and technologies used for sharing and managing content, knowledge, and applications.
Hi STChiew,
Based on my test, you don't need to add the external user's email domain into the list of domains, actually, the user is already in the tenant when you share the site with him. And the user can still sign in with his own email address to the site which is shared by you.
About your second question, we'd like to inform you that it is not feasible to automating this when sharing with new external users.
Regards,
Tisky