I have a daily message sent out from my server to a test account at outlook.com for two reasons: to try to work around this behaviour and to know immediately when there is a delivery issue.
All providers should be doing that. Most will remove IPs/domains after 90-120 days.
SMTP 550 means the email bounces. The sender knows but unless they're also the admin they can't do anything about it. The recipient knows nothing. In the most recent case that happened to me, it happened when I sent a reply to an @outlook I had just received a message from (and was regularly receiving emails from, but only rarely needed to reply).