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This notification is NOT A FIX on email relay per se, it is that O365/M365 is removing the capability to relay emails where the only "valid" email address is in the header sender - we will start reject such email after we finish the deployment. The "valid" means the email address must be with your accepted domain.
The report is for you to identify such emails so you can make necessary changes on your end. The report returned error because the notification address is not in your accepted domain. We cannot support that due to security concern.
As for NDRs, in this case, such emails will NOT be accepted by O365, hence NDRs will NOT be generated by O365. Your on-premises servers will receive a rejection error, and needed NDR will be generated there. Please read the entire notification carefully in its entirety (since there are several updates since its original publication.)