The wording is kind of ambiguous, but it seems that App-Specific Passwords will continue working
> If you have scanners or other devices using simple mail transfer protocol (SMTP) or LSAs to send emails, you’ll need to either: configure them to use OAuth, use an alternative method, or configure an App Password for use with the device.
> All Other Applications. If the app you are using does not support OAuth, you will need to switch to an app that offers OAuth or create an app password to access these apps.
> If you have scanners or other devices using simple mail transfer protocol (SMTP) or LSAs to send emails, you’ll need to either: configure them to use OAuth, use an alternative method, or configure an App Password for use with the device.
> All Other Applications. If the app you are using does not support OAuth, you will need to switch to an app that offers OAuth or create an app password to access these apps.