Why would Sendmail refuse mail to go through to the local system or to the defined system domain but allow mail to be sent to other domains?

Release Found: Red Hat Enterprise Linux 3 & 4

Symptom:

There had been changes to the way Sendmail handles email from previous versions. Previously, Sendmail will connect directly to the receiving Mail Transport Agent (MTA). It is possible, at that point, not to run the Sendmail daemon but still be able to send emails. In Red Hat Enterprise Li...