SharePoint Permissions

When you open the advanced permission settings, click Grant Permission on the ribbon. Then, add your distribution list (such as “Everyone Except External Users”) and grant it direct access, rather than including it in any default groups. Once direct access has been assigned, remove the DL from any default groups, such as “Members, Visitors or Owners". 

This direct access configuration is automatically applied at the site level. Although the modern experience interface only shows the three default SharePoint groups, any direct access assigned through the advanced permission settings in the classic experience is still in effect. In other words, what you see in the modern experience does not negate the permissions you’ve already set through the classic interface.