I'm adding this Q/A because I just stumbled upon this limitation today, and I was not able to find any documentation about it; there is an old KB article about this issue, but it's currently not indexed by Google (probably because it was published years ago and never updated), and the issue is never mentioned elsewhere.
Is it possible to create a OU in the parent domain with the same name as a child domain?
Is it possible to create a child domain with the same name as a OU in the parent domain?