Restricted Domains are the domains which provides restricted access to the items of an app. This Domain should not be confused with the Normal/ Member Domain as normal domain allows you to control the visibility of the apps and their fields, but does not allow item fields filtration. Restricted Domains are used where you have given access for the items of an app to the user but you do not want the user to see all the items. If you want the user to see only some selected items out of several you have in an app, restricted domains should be used. Based on the field values in the items, the items can be filtered for viewing.
Creating is restricted domain is same as creating other domains, it's just that you will have to mark the Restricted check box at the time of domain creating a restricted domain, the way its highlighted in the image below. (Note: The name of the Restricted Domain can be anything. In the article it is used as Restricted just to indicate it's behavior).
Under this tab you decide access of the applications and their fields by checking and unchecking the corresponding check boxes.
2. User & Role :
This tab gives you option to add members to the domain as Workspace Role or members can be added individually.
3. Sharing Rule :
This tab lets you decide the filtering of items on the basis of the field values in the item. The apps that you have selected in the application tab are the only apps those will get listed here. Rule based sharing is covered in a separate article in detail. For more information on sharing rule, click here.