I'm curious also. I have a suspicion, which I'll get to in a moment. First, SMTP (outgoing mail) servers are completely separate from the incoming mail servers at your ISP. They may or may not have the same URL, but is is quite common for them to be different (outgoing.myisp.com vs incoming.myisp.com). And there's nothing in the Internet protocol to prevent you from using any SMTP server you want when sending email. You could even have your own on your computer (which is what spammers do, except they co-opt your computer with a virus and secretly install an SMTP server on it, then send their spam through it).
To prevent spammers from using the ISP's SMTP servers there are two strategies: The first is to allow only computers on the ISP's network to use its servers. BellSouth and I think RoadRunner do this. You don't need to enter your user ID and password for sending, because the server knows who you are from your IP address. But this means you cannot use your ISP's servers if you are not at home.
The other strategy is to require you to enter a user ID and password when setting up the SMTP server on your phone. The ISP then knows who you are from your credentials, and will allow you to use the server whether you are on their network or not. Verizon DSL and FIOS work this way. This is actually less secure for spam prevention, because it's fairly easy to guess many people's passwords, and your user ID is very easy; it's your email address.
If your ISP uses the first method you cannot send over WiFi using their server if you are not on your home network. So AT&T (and all other carriers) have a special SMTP server that works like the 1st method, but on the carrier's network. For AT&T the SMTP server address is cwmx.com (Cingular Wireless Mail eXchange; remember, AT&T is Cingular rebranded).
If your ISP uses the first method and you are on some other WiFi network you can't normally send over WiFi, which is why you sometimes have to turn off WiFi to send. But there are workarounds; many WiFi providers intercept the sending SMTP server address and redirect it to their own SMTP server, so you don't notice. The other option is to subscribe to an open SMTP service. This is usually not free, but is not expensive either.
As to what happened to you, I've noticed that the number of messages reporting problems sending email has dropped dramatically recently. I suspect that Apple or AT&T can now remotely add cwmx.com to your server list in your phone.