MS people are trying to mislead us or they don't know better.... and hope people don't catch the details. OAuth is supported in several versions of Outlook - it's not new. The screen you showed indicate you are logging into a work or organization account, hence the outlook.office365.com domain and you are showing Bearer*. This means your account should be properly authenticated.
If this was a consumer account, i.e. Hotmail, Outlook.com, Live or MSN mail, then the OAuth will not happen. To me, it's not Outlook itself that is missing the OAuth related code, but the server side is rejecting OAuth like an account is not provisioned for that.
The MS people here kept saying OAuth is supported on the consumer accounts, but then they stop short of saying what protocol. If you read through all the posts (ironically, I used Copilot to read it for me just to make sure), OAuth is only supported on IMAP protocol on the consumer accounts - that's only thing they confirmed. All of us are dealing with Exchange/EAS/EWS issues and I am nearly certain those protocols on the consumer accounts are not provisioned with OAuth or at least not universally to all accounts.
The end game is to force people to buy Office 2021 for those hardcore users... or force people to use free "new Outlook", so MS can intercept and collect all of your non-MS data. It's more of a strategy that they laid out to force our hands. Your best option is to move your data off MS systems if you have privacy concerns.