You’re partially right, I’d like to add some details: websites can also check if a domain (e.g. example.com) actually exists. So if you smash random letters on your keyboard and you end up with a non-existing domain, a website will be able to stop you from using that address.

More advanced websites also check for an MX record on the domain DNS. If a domain exists but it doesn’t have an MX record, then it’s not going to be able to receive emails and may be blocked in sign up forms.