[rstupek]

Actually the answer is quite simple, their servers are the ones retrieving emails so they have access to the email contents (perhaps for training data?)

[ben_w]

That isn't really an answer at all, as you can do what you like with data on your servers without making a new client.

Even client side, that doesn't explain (as per article) a complete do-over as a web app wrapped in a browser.

[rstupek]

Prior to this new version, Outlook did not pull emails through Microsoft servers but pulled them directly from the mail server configured. Now, when you retrieve email from Outlook New, Microsoft servers are "proxying" the emails through their systems.