No reason to not just host email with any domain provider and manage the rest with a small NAS in the office.
Not only cheaper and taking away the update obligations of Microsoft. Which I am sure kills more productivity than managing a Synology server.
Sounds like even more of a single point of failure, just on your domain provider (who's much more likely to go out of business) than Microsoft. And one with no chat, or phones, or conference calling, or shared calendars, or endpoint management, or SSO, etc, etc.
Just sticking all your data on a cheap NAS in the office works for a few people, although it becomes PITA to do granular permissions when you don't have any proper central authentication. But then it's also a massive single point of failure, so you need to implement a backup solution, and then a way to share files outside of the organisation, and then a VPN so that people can work remotely, and then some monitoring so that you know when a disk fails....and that's getting way beyond what a non-technical person can manage.
It's fine if you're just using it for your hobby. But building your business on top of something like is very likely to come back and bite you in the arse.
And I am sure there are even better options than a household Synology.
But putting everything in a cloud and fully depending on a single provider that for the majority of people is in a foreign (and politically dangerous) country is definitely not the obviously better option.
And plenty of small businesses and hobbyists do that, and then after they "setup and forget" it they get compromised or lose their data a few years down the line.
Why would using a NAS (or small server) mean ignoring any basic logic (and business requirements) and not having off-site backups?
People absolutely should be setting up offsite backups. And more importantly, testing them so that they can prove that they work. But if they have no technical team then neither of those things are going to happen.
Also, much as I wish otherwise, very little happens via email in this business. It's all chat apps now.
The important part is cross platform real time communications, calendar, and office. Some kind of kanban board is a nice bonus.
Synology is also setup and keep running for years usually.
It's just an example tho. I just don't see any need for a Microsoft cloud solution for a small company (or anyone really)