Explanation:

According to the Microsoft SC-300: Microsoft Identity and Access Administrator Study Guide and Microsoft Learn's official training on "Manage entitlement management in Azure AD Identity Governance", connected organizations and access package policies determine who can request access packages.
When creating an access package for external users, administrators define connected organizations and then specify who from those organizations is allowed to request access. This configuration is managed through access package policies within Identity Governance. Each policy defines the requestors (users from specific domains or organizations) and approval settings.
To allow access for users who have @fabrikam.com email addresses, the correct step is to configure an access package policy in Identity Governance, specifying that only users whose domain matches fabrikam.com can request access.
However, since Fabrikam also owns another domain ( litwareinc.com ), and you want to block those users from accessing the package, this restriction cannot be configured solely through the access package policy.
The Microsoft documentation clarifies that to block specific external domains from collaborating or being invited into the tenant, administrators must use the External collaboration settings in Azure AD. These settings allow tenant administrators to define which external domains are allowed or denied for guest invitations.
Thus:
* To allow fabrikam.com # configure Access package policy in Identity Governance (to specify who can request the package).
* To block litwareinc.com # configure External collaboration settings in Azure AD (to block invitations or collaboration from that domain).