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I'm doing some research into setting up a Saas app like SquareSpace where a user can point their domain name e.g. example.com to example.myapp.com using a CNAME record.

I'm using a CPanel/WHM managed host.

Do I need to explicitly allow the domain example.com through in WHM or add it in CPanel as an addon domain for it to work?

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you would likely have to edit your vhost to listen for all domains, you would do this via a vhost include file

more info here: http://joneslee85.wordpress.com/2010/02/18/howto-manually-configure-cpanel-apache-vhost-easyapache/

but you would basically setup your main site (i'm hoping its the only site on its ip) as the above link says with the following code in the conf file

ServerAlias *

then all they need to do is cname or point dns at your server name or IP

its not really possible to cname the root domain.com but www.domain.com or sub.domain.com is cname'able

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