With the System Property csm_auto_account_domain_generation set to True:

When the system property csm_auto_account_domain_generation is set to True, it specifies that a new domain is created automatically and placed under the TOP domain whenever a new account in the Customer Service application is created. If the ‘parent’ field on the account form is populated and a new record is inserted, it creates that account as a subdomain of the parent. This property is particularly relevant in domain-separated environments, ensuring that new account records are properly organized within the domain hierarchy2.