The program it replaced didn't do this, hence the surprise. You could be using the old program, and one day windows update it with this new program, and suddenly your passwords are uploaded to Microsoft cloud service when you launched it. People would similarly surprised if K-9 mail upcoming replacement, Thunderbird mobile, suddenly store your password in the cloud.
Why is someone using Outlook to sync a different email address?
Why not keep the apps separate? Or use the Mail app built into Windows?
Seriously, someone explain the use case here because I don't understand. If you're using an outlook account, MS already has all that stuff. And if you don't have an Outlook account, why are you using Outlook?
Why is someone using Outlook to sync a different email address?
Outlook is an email client. It can work with any email provider. The fact that they started calling the server-side "Outlook" as well has made things super confusing.
So the gist is the default mail app is being "upgraded" by Microsoft to Outlook for Windows app, so your account credentials previously stored in the mail app now got uploaded into the cloud.