When a Microsoft 365 tenant is first provisioned its domain is created as "mycompany.onmicrosoft.com" where "mycompany" is a distinct name for the business or organization. When users are created their login user name by default will be "user1@mycompany.onmicrosoft.com" until a custom domain is added. To setup a custom domain with Microsoft 365 it only requires adding a few DNS settings with your domain registrar. Once this is done users can login with a more readable user name such as "user1@mycompany.com".