Are these types of domain names for websites illegal?

Some guy made a website and called it abc.com before abc got it and they sued. But the guy was trying to hold it hostage and keep it just to extort money out of them, so it would depend on surrounding cirstances. If it was done for the purpose to induce people to believe that you are somehow affiliated with "website.com" then yes, it would be actionable. But if you were in a totally different trade business, it may be okay. It depends on lots of factors.