Have you ever wanted to create a conditional access policy in Azure AD that applies only to the external user type of your choice? Though the former experience had all the external user types included under one option (All guest or external users), the new preview feature allows admins to choose from multiple choices.
What is the need for External User Types?
Using the new External user types, admins can now allow/block access to specific external users. You can block access to a kind of external user(Azure AD B2B Direct Connect user) and allow access to another type(Azure AD B2B Collaboration user)by requiring an MFA challenge. These users are categorized based on their relationship with your organization.
For more detailed information, please check out the following blog.
https://blog.admindroid.com/external-user-types-for-ca-policies-in-azure-ad/
