Microsoft is deprecating older Microsoft authentication methods. This has brought into question in other threads like here and here the use of app passwords and whether Microsoft no longer work as an option for sending out passbolt emails.
I will add more as I find it, but here are some references specifically mentioning this.
Microsoft support pages:
If your Basic Auth for the organization is somehow turned off by Microsoft, enter
Diag: Enable Basic Auth in EXO into the help field while on your Microsoft 365 admin center page and then Run the test which will report which protocols you can select to enable. If you already have Basic Auth enabled for the organization, SMTP is not expected to be on the list, because it’s not affected, as stated above. However, you may have to enable Basic Auth in general for your orgnization.