SPO - External Sharing options

[cw0002]

Hi am looking for some advice on how to best structure external sharing within the company. 

By default external sharing is off, but there is a need to share externally now. 

can i break individual folders permissions to allow external sharing from a team site.

Or how do others suggest i control external sharing in this manner. I had been suggested to create another site just for external sharing, but then its another area for them to access, and what will stop them from just ending up using the external sharing area generally

[#2]

In my experience, the best approach is to configure sharing policies for specific sites that require external sharing. For example, I probably don't want people to share directly from a department site, but it might be allowed for some project sites.

The problem with allowing people to share from sites that are defaulted to no-external sharing, is it becomes difficult to manage. If someone shares a folder instead of a file for example, it could lead to other issues.

You can use Site Sensitivity to configure the default sharing link types also.
https://docs.microsoft.com/en-us/microsoft-365/compliance/sensitivity-labels-default-sharing-link?WT...

[#3]

@cw0002 To add on to @Steve Knutson's recommendation, It is always better to keep external sharing enabled sites separate especially if you allow any user/site owners to invite external guests. You need to enable external sharing at tenant level first and then control individual site collections. I would recommend to not allow guests in your Intranet and department sites. Keep external sharing enabled sites separate and purge them periodically. You can also control how long you grant access to a Guest by setting up expiration policy. Check this article for more info.