emails from microsoft365 bouncing, showing "no such user"

One of our domains runs their emails on Microsoft365/Outlook, and they were unable to send emails to some other domains they own. Some messages would bounce saying "no such user". It turned out that the recipient domain had been added to Microsoft365 as an additional domain, but no users were added under that domain. Also, that domain was actively being used, with MX records pointing to Google Workspace. So, Outlook or Microsoft365 was not looking at the MX records, but instead looking at the internal users with active directory, and deciding that there was "no such user". 

The solution was to remove that recipient domain from Custom domain names - Microsoft Azure. 

Any other users who had been added to the Microsoft active directory would need to check their inbox on Outlook and not on Google Workspace for any emails sent from our domain on Outlook. This would be relevant for emails being sent from Onedrive, Microsoft Teams, etc.