This is related to Can't create admin user: Error happened during creating seafile admin
Just execute:
$ docker compose exec seafile-db mysql -u root -pmysql -e "ALTER USER 'seafile'@'%.%.%.%' IDENTIFIED WITH mysql_native_password BY 'seafile-user-password';"
$ docker compose exec seafile seafile-server-latest/reset-admin.sh
You can find the generated seafile user password for example in seafile.conf.
Any particular reason you didn’t used the compose file provided in the manual (which uses mariadb, preventing this issue)?