We investigate the influence of magnetic domain configurations on the magnetic Barkhausen noise (MBN) and magneto-mechanical behavior of electrical steel. Micro-macro magnetic properties from individual crystallographic grains with different domain wall (DW) orientations under different tensile stresses are measured. We show a strong dependency of the MBN activity and magneto-mechanical behavior on the DW orientation. Time evolution and statics of magnetic domain states are elaborated for the analysis of the magnetization processes, revealing an interaction between the stress-induced demagnetizing effect, the magneto-elastic behavior and the DW dynamics. The variation of supplementary domains under tensile stress is directly connected to the demagnetizing effect, further affecting the MBN activity. In addition, the influence of magnetic domain configurations in the neighboring grains on the DW dynamics and MBN jumps is studied. From this, the dipolar-dipolar and intergranular magnetic coupling interactions are derived. The results provide substantial microscopic insight for MBN and magneto-mechanical behavior analysis.