Domains were originally buildable from 0,0,0 to 16384,16384,16384 - you could not build in the negative direction on any axes. Last summer (~early august) - we expanded the size of the domain by 8x, allowing you to build in the negative direction.
“Skyboxes” are always drawn in the distance, they are try skyboxes in that sense. They aren’t really drawn at “some location” they are drawn so that no matter where you are they appear to be at the limit of your visibility.
Zones are entities like any other entity. They can be big or small. Zones can be placed inside other zones. When you enter a zone, if it has a skybox, then we will change the skybox to match that zone you are in.
To repeat: we’ve never made the buildable space of a domain smaller, and we never will. We may in the future make the buildable space of a domain larger… but I don’t expect that change to happen any time soon.