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The tenancy is set to Allow users to invite and share with authenticated external users and it works for site collections created from the admin center.

I am trying to set a communication site to the exact value and I am using this powershell script.

Set-SPOSite -Identity https://XXXXXXX -SharingCapability ExternalUserAndGuestSharing

I get an error message saying that

The SharingCapability set for this SPOSite will not take effect until the 'ExternalUserAndGuestSharing' SharingCapability is also enabled on the SPOTenant.

I thought ExternalUserAndGuestSharing was the same as "Allow users to invite and share with authenticated external users" but it does not seem the case.

What am I doing wrong?

I would like to avoid to set the tenancy to "Allow sharing to authenticated external users and using anonymous access links"

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You have to use below command for external sharing with authenticated external user with valid email address.

Set-SPOSite -Identity https://XXXXXXX -SharingCapability ExternalUserSharingOnly 

Assuming you have below set at Tenant level

“Allow external users who accept sharing invitations and sign in as authenticated users”

Regarding ExternalUserAndGuestSharing - External user sharing (share by email) and guest link sharing are both enabled, this is for anonymous access.

Refer this link for more details

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