That feature is to allow for on-the-fly alias names if your email provider supports it. You should check with them to see if they allow such aliases.

The email provider is Google Workspace. I contacted them and they say that the service does support that. Here's the deal. Up until now, when I wanted to send an email from an address of a different user than myself I would go to the account settings and change. For example: user1@mydomain.com to user2@mydomain.com. I only change the part before the @ sign, everything else stays the same so authentication has no problem. But that process is cumbersome because after I send the email I have to go back to account settings and change it back. I was hoping that this function "Customize From Address..." would save me the steps and just send the email out the same way. But, upon checking what the receivers get they appear to get the email coming from my original address, user1@mydomain.com instead of user2@mydomain.com which I used as the temporary From address.

What you are suggesting is exactly what the feature was created for. But as you are already aware, google do not support the use of "unregistered" from addresses from "your" account.

My free account, so I assume you paid one, can send mail with a different from if the email address is set up and verified in your account setting on google. Try this link https://mail.google.com/mail/u/0/#settings/accounts under the heading "Send mail as"

Having to authenticate every address I want to use as "FROM" first on my (paid) Google account kind of defeats the purpose of doing this "on-the-fly."

This Thunderbird feature does not work exactly the same way as simply changing the Email Address in the account setting because emails do go out with the modified address after changing the settings and they do not go out using the "Customize From Address..."

This would have been a perfect solution for me. I have my paid Google account (I have my own domain hosted on Google) setup with a catch all email address. When I communicate with companies I don't trust to not send me spam I use a customized address for them like "macys@mydomain.com" and regardless what I use before @mydomain.com it arrives at my regular email address. Sometimes I'd like to reply to those incoming email from the customized address I have for them but if I have to first go to Gmail to authenticate it it is even more cumbersome than changing the address in the Thunderbird settings. This method of using customized emails let me know right away who's the source of spam to my account, who sold my address, etc.