SharePoint in Microsoft 365: Replacement for 'Contacts' widget

jacobite Yes correct. Unfortunately, using this web part you can only enlist the users from your tenant/domain. 

If you want to show the list of users from another domain, you may need to use other web parts (like Text web part to add user name/email link, etc.) which might not have similar UI as of contacts app or people web part.

Or you can build a custom web part on your own using SharePoint Framework (SPFx). There are few web part samples available on GitHub repository which might help you to get started with.

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