It feels to me like this is a regional issue somehow. I have two accounts set up using the Gmail app on Android. One of them seems to sync Ok for a certain period while the other isn't working. Then I maybe get some overlap where both work and then the other fails. Potentially something changes with GLB-type services? So maybe certain region MS data centres have the issue and certain others don't?
Both are using app passwords as the switch to modern Auth just fails to display a login page.
Since finding this thread, I've stopped trying to re-auth or use new app passwords and the accounts just sync for part of the day and then sit there saying sign-in required for the rest of the time. Frustrating to say the least.