The ability to share your SharePoint sites and documents with people outside your organization is a very compelling capability in SharePoint Online. You are allowed up to 500 unique external users per month on the P-plans, and 10,000 for the M and E plans at no cost.
The people outside your organization are called External Users. External Users means users that are not either your or your affiliates’ employees, or your or your affiliates’ onsite contractors or onsite agents.
Over the years I've had so many questions as to what an external user can or can not do in SharePoint Online.
Here is a couple of the things they can do (have the rights to)
And here is a couple of the thing they cannot do (do not have the rights to)
Read more here.
Note - the Online Services Use Rights and the Product Use Rights is the authoritative documents in use rights.