Ah OK, I understand now. I got it wrong.

I thought this automatically created an email ID on your server with the <username>@<joomladomain.com> and gave them access to an email address with your domain on it when they signed up. That would be a loaded cannon.

I had to disable all the notify a friend, email this story, etc. from my sites because people were using them to spam. Almost lost my hosting account once.