The SQL spec's answer to that conundrum appears to be "NULL is a valid value of every domain, and if you don't like it, tough".
To be fair, NULL is a valid value of every type. Even VOID has NULL.
In this context, it’s a bit weird to be able to decree up front when defining a type that no table column of that type, anywhere, may ever contain a NULL. It would be nice if there was a way to reverse the default so that if you (almost or) never want NULLs anywhere that’s what you get without saying "NOT NULL" all over the place, and instead just specify "NULLABLE" (or something) where you want. But that effectively means optionally changing the behaviour of CREATE TABLE and ALTER TABLE.