I would strongly doubt (though not completely rule out) that Microsoft is reading your personal mail hosted on your personal mail server. Like what would that even look like, their IMAP client is forwarding email to headquarters?

BUT, more likely, it's some sort of "check in" or "dial home" feature that isn't working. Or plausibly, maybe they count "local user checked email" and their analytics endpoint is down.

Regardless, it's definitely surprising that a traditional desktop application would be blocking when only polling from local/trusted data sources.