In the following diagram, the application or device in your organization's network uses a connector for SMTP relay to email recipients in your organization.

• The Office 365 connector that you configure authenticates your device or application with Office 365 using an IP address. Your device or application can send email using any address (including ones that can't receive mail), as long as the address uses one of your domains. The email address doesn't need to be associated with an actual mailbox. For example, if your domain is contoso.com, you could send from an address like [email protected].
• Office 365 SMTP relay uses a connector to authenticate the mail sent from your device or application. This allows Office 365 to relay those messages to your own mailboxes as well as external recipients. Office 365 SMTP relay is very similar to direct send except that it can send mail to external recipients.
• Due to the added complexity of configuring a connector, direct send is recommended over Office 365 SMTP relay, unless you must send email to external recipients. To send email using Office 365 SMTP relay, your device or application server must have a static IP address or address range. You can't use SMTP relay to send email directly to Office 365 from a third-party hosted service, such as Microsoft Azure.