I researched this issue and found it to be a discrepancy between the Terraform and Azure documentation. I also opened an issue on the GitHub repo with this info.
RestoreExternalBackup is listed as a possible value for CreateMode in the Azure API documentation for databases. However, the create mode documentation doesn't describe how to use it. This option should not be available.
Looking at the Managed Database documentation, it clearly defines how to use the RestoreExternalBackup option. Oddly enough the Terraform documentation doesnt list any create modes for managed databases. https://registry.terraform.io/providers/hashicorp/azurerm/latest/docs/resources/mssql_managed_database
When trying to use RestoreExternalBackup to create a database the error indicates that option requires a pointer to a storage account with the message "Missing storage container URI". Storage account information is not a valid property when creating a database resource, only for a managed database resource.
Database = https://learn.microsoft.com/en-us/rest/api/sql/2022-05-01-preview/databases/create-or-update?tabs=HTTP
Managed Database Docs = https://learn.microsoft.com/en-us/rest/api/sql/2022-05-01-preview/managed-databases/create-or-update?tabs=HTTP