Announcing General Availability of Inbound SMTP DANE with DNSSEC for Exchange Online

chrislehrPatriot yes, unfortunately Fully Delegated domains are one of the scenarios in the limitations section for the DANE documentation: https://learn.microsoft.com/en-us/purview/how-smtp-dane-works#limitations

We are planning on addressing lack of support for fully delegated domains sometime next year, but I can't share a specific ETA at this time. If you need SMTP DANE with DNSSEC for that domain right now, you may want to investigating moving your domain to another provider that supports DNSSEC for your contoso.com.