Nino_Bilic , The_Exchange_Team - the confusion around App Passwords is stemming from the fact that the Docs article states unequivocally that they'll stop working. No exceptions are noted for SMTP AUTH, so it's very confusing. As a former Exchange/AAD admin, i immediately read it as meaning that the entire set of functionality called App Passwords will stop working.
If I may, I'd like to suggest that some additional context needs to be added to that article. "App Passwords (a specific form of Basic Authentication) will continue to work for SMTP AUTH until further notice, or until you intentionally block basic authentication for the SMTP protocol" or something along those lines would save everyone a lot of grief.