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Organizations are tied to domains, but yeah, that part is more confusing than the rest...

Instance also has a domain on top of that, but there are plans for a "simple" mode, assuming single org.

I mean nothing wrong with using a domain for routing, but I think most SaaSes would rather have a routing based on the email address.

That's basically what it does. You can activate Domain Discovery and verify a Domain on an organization, with that zitadel routes users to the organization based on the suffix (ie. email domain)

Thanks for clarifying, I must have missed it in the docs. If you see this comment, I'm wondering if this discovery functionality will also be customizable when the custom UI screens feature gets added?

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