Using an app password is essential if you enable two-step verification for your Google account. Two-step verification adds an extra layer of security by requiring a code from your phone or authenticator app in addition to your password when signing in. Regular passwords won't work with apps that don't support two-step verification, which is why Microsoft created app passwords. Just generate an app password for your iPhone's mail app and you'll be good to go!
Here are some additional points you might find helpful:
- You can generate app passwords through your Microsoft account security settings.
- App passwords are unique and only work for the specific app they're created for.
- Consider creating strong and unique passwords for your Microsoft account and other online accounts.
This applies to Google, Yahoo, and Aol too.
You may have enabled two-step verification on Google --> Sign in with App Passwords - Google Account Help