Domain expertise looks like understanding all the pitfalls holistically and knowing the right ways around them. In the case you describe (deciding on technologies), this type of decision often falls to CTOs because they need complete understanding of all pitfalls of an eng department, many of which are business, people, or financial issues, not tech.
Technical advantages needs to be weighed against scaling up technical velocity (hiring developers). This is why you you might want to forgo more niche technologies for mainstream. However, if you're never going to scale past 3-10 people or the technology really suites your business case well (ie. whatsapp built on erlang), you can break that rule. Thought leaders on both sides will advise for either case, but stage 3 will know their requirements very, very well, and how to choose the right thing that will avoid all pitfalls. Another way to put it; if you hit an unanticipated pitfall down the road later, you didn't really understand the domain.
Some decisions are literally millions of dollars or more for the business, and can only be made once - in this case, you definitely want a stage 3 person who sees all the pitfalls. If you decide on lisp for your language and you can't hire enough developers to scale up, you might be bleeding customers due to lack of engineering velocity, or large price tag acquisitions may fall through because they can't do anything with your code.
Other decisions are worth 0 dollars to the business, and many engineers spend too much time on them trying to do stage 3 decision making. They usually do this with an incomplete understanding of the pitfalls (most 0 dollar decisions don't have pitfalls by definition, just a bunch of "better or worse" arguments from thought leaders - react vs vue anyone?).