Hi, POP/IMAP or SMTP authentication protocols are legacy protocols and they use basic authentication for their functionality. According to MSFT announcement, post October 2022 Basic Authentication will be disabled on the Tenants. So yes, you will be using Modern Authentication for configuring Outlook. However, if you do not want MSFT to disable basic authentication for your tenant, and not to take any action on these protocols, you can run a test in your Office 365 Admin Center "https://aka.ms/PillarEXOBasicAuth" .
Or you can login to Office 365 Admin Center, click "Help and Support" button, and enter "Diag: Enable Basic Auth in EXO” in self-help system. Here you can select what protocols you want to opt out from being disabled. Hope this answers your query. Thanks!