0) Ensure External Sharing is properly setup on your Office 365 Tenant! Follow these two Microsoft Posts to validate - https://docs.microsoft.com/en-us/sharepoint/turn-external-sharing-on-or-off and https://docs.microsoft.com/en-us/sharepoint/change-external-sharing-site
1) Ensure you set the Office 365 Group Privacy as "Public within organization"
2) Navigate to your site collection features page - https://<yourtenantname>.sharepoint.com/sites/<yoursitename>/_layouts/15/ManageFeatures.aspx?Scope=Site
3) Ensure you deactivate this Site collection feature “Limited-access user
permission lockdown mode”!
4) Voila! You should now be able to Externally share folders and documents located inside the document libraries within site <yoursitename>
