In calculus, when we take limits of functions, say $\lim_{x\to a}f(x),$ do we require that $x$ tends to $a$ from within the domain?
For example, I would say $\lim_{x\to 0} \sqrt{x}=0$ since I am under the assumption that by "$\lim_{x\to 0}$" we mean that $x\to 0$ and $x$ is in the domain. However, this is not consistent with Stewart's "Calculus." 
So at this level, should I say that $\lim_{x\to 0}\sqrt{x}$ is undefined?

Stewart's Calculus book isn't the greatest for getting all the details right. But the book is fine for an introductory course in Calculus where the interest primarily is to be able to calculate limits. The book does provide motivation for topics like limits. One can discuss if things ought to be stated more precisely. And sometimes greater precision doesn't mean greater clarity.
Given a function $f: D \to \mathbb{R}$ with domain $D$ and $a$ is an accumulation point of $D$, we write that $$ \lim_{x\to a} f(x) = L $$ if $$ \forall \epsilon > 0 \exists\delta>0: x\in D , 0<\lvert x-a\rvert < \delta \Rightarrow \lvert f(x) - L\rvert < \epsilon. $$
Often we don't write the $x\in D$ part, but it is assumed. With this definition is is perfectly fine to write that $$ \lim_{x\to 0} \sqrt{x} = 0. $$