Using classic Outlook for Windows in business environments
If you're attempting to add a Gmail IMAP account, you need nothing else, Outlook 2021 supports Oauth2 (A.K.A. Modern Authentication) for IMAP service, and Gmail thereby considers it a "Secure App". All you'll need is your user account and standard Gmail password, no 16-digit App Password is necessary.
If, OTOH, you're attempting to add a Gmail POP account, NO Outlook version supports Oauth2 for POP service, so you would need to generate and use a 16-digit App Password in this case.
TL;DR
Outlook 2021 + Gmail IMAP = standard password
Outlook 2021 + Gmail POP = 16-digit App Password