I’m setting up a Microsoft Graph connection in SmartConnect 21 to use for SmartConnect email support instead of using the SMTP library.
I was able to get the authentication token without errors, but when I test the email, it fails with the error:
Failed to send email: The error was: The mailbox is either inactive, soft-deleted, or is hosted on-premise.

Why is this failing in SmartConnect?
Microsoft Graph Connector
There are a few different reasons you would get this when trying to send an email using the Microsoft Graph Connector.
These Microsoft Learn links discuss the issues and resolutions to the error:
How to Fix MailboxNoteEnabledForRestAPI
Microsoft Graph API throws a Mailbox Error
In this case, the user that was the authenticating user (not visible in the screenshot) did not have a mailbox assigned. Once the user was assigned a mailbox, the test email was sent successfully.