The issue was actually that we support many different protocols (not just mail) and some combinations of clients/protocols have had issues in the past (it might have been some FTP clients I think, but can't remember right now.)
Anyway, this restriction no longer applies as we now require server-generated app passwords for 3rd party apps: https://www.fastmail.com/help/clients/apppassword.html. So feel free to use as many spaces as you like in your password!
Pre-Touch Bar, of course...