Can i setup a second domain in my Office 365 tenant to be used only for Office 365 ProPlus licenses activation? Will there be any issue on the first domain that is used for other Office 365 services (Exchange, SharePoint,Teams,OneDrive)?
Another question is what DNS records will I be setting up for the second domain?
Well licenses are activated based on successful user authentication, meaning you will have to assign UPNs associated with said domain to all users. Which in turn will affect how they access any other Office 365 service.