I have purchased a new theme bakery-premium-wordpress-theme

Can we use the purchased theme on several domains…

You can’t

One purchase = one license = one website = one domain

You will need to buy more copies for each individual domain or website


In Uploading does it ask the domain name or license key

Take a look on this article hope it will be helpful.
Is it helpful

for him @charlie4282

I saw three images here

It is not appropriate or relevant to discuss how a plugin or theme protects it’s licensing.
1 website - 1 license / purchase.

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I have purchased Bakery Premium WordPress Theme from Envato before going live i want to test it on temporary domain so i can’t do that

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That’s different - if it is a staging site and then being removed so that it can be used on 1 live site, then you need to contact the author and ask them how best to do that but generally they allow that type of activity as long as the staging site is disabled before activating the live site