Workaround:
Rule (from Apple):
You need to have one address that will administer your new domain.
You need to verify this address
This has to be done before you point your MX at apple
You need to press the verify button to have Apple send a verification link
But: this email cannot ever have been an ApplieID - so not used for any apple product ever.
Your problem:
You login to Apple with *janedoe @ gmail.com - its your personal AppleID and you bought iCloud+ with it
You own the domain foobar.com and use it for your work - but its costing money to host and you already pay for iCloud+
You have janedoe @ foobar.com as your email, and its already an AppleID
You want to receive email with janedoe @ foobar.com on Apple iCloud+ custom domain email but the above rules are blocking you
Solution / workaround:
Ensure your email domain - call foobar.com is currently hosted and receiving email - say with GoDaddy or whoever
Dream up a new email name - eg help or admin or support @ foobar.com - that has never been an Apple address
Ensure that email alias help , account or whatever can receive email at your current host
You might be able to do it by creating a "catch-all" address - google for that + your current email host
Start here: https://www.icloud.com/icloudplus/customdomain
Send a verify email address request to admin @ foobar.com via Apple's 4 step wizard
Go to your current host and verify the address.
Go back to https://www.icloud.com/icloudplus/customdomain
Get the instructions to update your hosting to point your MX records to Apple
Make sure "Allow all incoming messages" is turned on - here: https://www.icloud.com/icloudplus/customdomain
Wait some time - make a coffee
Go and click the check button and you should now be all set up on your new custom domain.
You should find that you can now send email to janedoe @ foobar.com it will turn up in the inbox on the iCloud account, when you login in. This is because of the "Allow all incoming messages".
Go here and log in with your Apple ID that owns the iCloud+ account
Click through to email settings and you can see the email addresses that you have access with.
Drawbacks:
Its difficult to send email as the janedoe @ foobar.com account - you don't have it in the dropdown
Third party email clients might allow that - could try Thunderbird, using an Apple ID app specific password.
The above works for me since I just want to be able to monitor that address. If I really need to respond to an email I can do it as help @ foobar.com