It'll be interesting to find out the root cause, assuming it ever comes out. Malice or stupidity? Did someone do an oops within the Outlook team (or some other team), or are they under attack?
I've heard from people know that an AD GPO was pushed causing firewalls to refuse DNS requests, which would fit in line with what everyone was/is seeing.
My guess is someone messed up when making a change to their DNS
DNS problems are at least partly affecting the microsoft.com homepage as well.
My guess is they changed DNS so they could keep the service up while cutting off an attacker's route.