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Inside our Office 365 tenant's Domains page >> we have the option to add additional domains beside the default domain as follow:

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So what is the purpose of this step? will our Office 365 tenant have 2 separate domains?

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When you sign up for Microsoft 365 services & you don't choose any specific/existing domain, Microsoft 365 creates a domain for you, like contoso.onmicrosoft.com & The user ID that you create when you sign up includes the domain, like alan@contoso.onmicrosoft.com.

Now, if you want to have your email look like alan@contoso.com, you have to buy the domain OR if you already own a domain, you can Add a domain and users to Microsoft 365 tenant you signed-up earlier.


Also,

  1. You can't rename the onmicrosoft domain after sign-up:

    For example, if the initial domain you chose was fourthcoffee.onmicrosoft.com, you can't change it to be fabrikam.onmicrosoft.com. To use a different onmicrosoft.com domain, you'd have to start a new subscription with Microsoft 365.

  2. You can't remove your onmicrosoft domain:

    Microsoft 365 needs to keep it around because it's used behind the scenes for your subscription. But you don't have to use the domain yourself after you've added a custom domain.

  3. You can keep using the initial onmicrosoft.com domain even after you add your domain. It still works for email and other services, so it's your choice.

You can find more information about Microsoft 365 domain on FAQ page at: Domains FAQ

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  • can you advice more on what you exactly mean by But you don't have to use the domain yourself after you've added a custom domain.
    – john Gu
    Jun 25 at 21:50
  • It means when you add a new/custom domain to your tenant, you can use the new domain to access the Microsoft services without having to use the onmicrosoft.com domain. It's your choice to use newly created domain & not using the onmicrosoft.com domain (But you can't remove your onmicrosoft domain as Microsoft 365 needs to keep it around because it's used behind the scenes for your subscription). Jun 26 at 8:26
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Yes. To add subdomains, you must manage your own DNS settings at your registrar's website. If you are letting Microsoft manage your DNS settings with NS records, or if you bought the domain from Microsoft, you can't add subdomains.

Typically, you can add up to 900 domains to your Microsoft 365 subscription.

For example, you could add the domains contoso.com and contosomarketing.com, and then add the subdomains www.contoso.com, www.partners.contoso.com, www.marketing.partners.contoso.com, and so on.

When you add a subdomain, it is automatically verified based on the parent domain that is being verified.

When you add multiple domains to Microsoft 365, you can host any of the services (like email) on any of the domains you've added. When you change your email to Microsoft 365, by updating a domain's MX record, ALL email sent to that domain will start coming to Microsoft 365.

Reference:
Can I add custom subdomains or multiple domains to Microsoft 365?
Add a domain to Microsoft 365

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Good question, I have face similair questions from all clients who use O365 for the the first time,

First, when an organization sign in on Office365 tenant for the first time:

  • Microsoft give you a domain for you (for example let's say your company is called "johnIT"),
  • This domain will look like this : "johnIT.onmicrosoft.com".
  • So the full email will look like this : "andreas.lionel@johnIT.onmicrosoft.com"

Now, you have the choice whether to stay on this default domain, or to buy or use your existing domain (for example "@johnIT.uk"

  • So the email will look like this : "andreas.lionel@johnIT.uk" the "Add domain" button, will help you on that procedure and guide you in order to add your domain to O365 tenant.

So, If you’ve recently registered for Microsoft 365, then you will want to register your company’s domain name with the service.

I hope i make my little answer clear to you.

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