how can I restore MSN mail to my MacBook air?

Using app passwords with apps that don't support two-step verification (microsoft.com)

What about application passwords? Will that keep working?

If application passwords are being used for MFA (Multi Factor Authentication) along with basic auth as another auth mechanism, then when basic authentication is disabled, app passwords used for MFA will stop working too.

Where can I find more information?

There are several resources that we wanted to provide here as additional reading:

• Basic Authentication Deprecation in Exchange Online – September 2022 Update – this is a comprehensive post containing more information about this effort.
• Deprecation of Basic authentication in Exchange Online – our official documentation related to this effort, with links to much more information and guidance.

https://techcommunity.microsoft.com/t5/exchange-team-blog/exchange-online-email-applications-stopped-signing-in-or-keep/ba-p/3641943

Exchange Online email applications stopped signing in, or keep asking for passwords? Start here. - Microsoft Community Hub