Reference - SMTP server properties

When you define a new SMTP server or edit an existing one in the SMTP servers application, you can specify the following properties.

General
Server name	Specifies the domain name or IP address of the SMTP server. By default, the connection to the server uses port 25. To use a different port, include it in the server name. For example: 127.0.0.1:26 Enter localhost if you wish to use the server provided by your local machine.
Priority	When an email (or batch of emails) needs to be sent out, the system checks the SMTP servers in the order of their priority and uses the first one that is available. As a result, servers with a higher priority receive a greater email load. The server with the highest priority for each website is the default SMTP server configured in Settings → System → Emails. If this server is busy or undefined, the email checks for any available server with the High priority, then Normal and finally Low.
Enabled	Can be used to manually disable or enable the server (within the context of Xperience). A disabled server is skipped when outgoing emails check for available servers.
Advanced
Delivery method	The delivery method for emails sent from the system: Network – the emails are sent directly to the SMTP server defined by the server name and credentials. The connection automatically uses the HTTPS protocol if supported by the specified server. Pickup directory – the emails are copied to a folder (defined by the Pickup directory option) on the disk, from where they are processed by the SMTP server. Pickup directory from IIS – similar to the Pickup directory method, except that the folder and SMPT server must be defined through IIS. You need to first install the SMTP server feature into your IIS and configure it properly. See more information in this article: Configure SMTP Email (IIS 7). Moreover, you need to ensure that the NETWORK SERVICE group has write permissions for the defined pickup folder.

Delivery method - Network

Username	The username used for authentication when connecting to the SMTP server.
Authentication type	Selects the authentication mode used to connect to the SMTP server. The options are: Basic (username + password) – uses Basic authentication. Fill in the Username and Password values. OAuth 2.0 – uses OAuth 2.0 token-based authorization. Fill in the Username and select valid OAuth credentials. Many mail services are deprecating support of basic authentication, leaving OAuth as the only viable authentication type. A notable example is Microsoft Exchange Online, which begins disabling basic authentication after October 1, 2022 (see Deprecation of Basic authentication in Exchange Online).
Password	Only applies when the Authentication type is set to Basic. Sets the password used together with the Username when connecting to the SMTP server.
OAuth credentials	Only applies when the Authentication type is set to OAuth 2.0. Selects the OAuth credentials used for authentication. You can create and manage the credentials in the Email OAuth credentials application. See OAuth for email servers.

Delivery method - Pickup directory

Pickup directory

Specifies a folder on the disk, where emails will be stored until the SMTP server processes them.

The IIS_IUSRS group must be granted write permissions for this folder.