If not using mail() as the outbound mail setting, recipient addresses for, e.g. activity assignees, are mangled.

I think there is a missing quotes problem, but this seems new so maybe it used to include quotes and now it doesn't? Or maybe something else changed.

Under Administer->configure->Global Settings -> Outbound Mail you have some choices. It seems to work like this:

Suppose an activity is assigned to contact Albert Einstein with email emc2@gmail.com.

Then the intended recipient comes out as Einstein, Albert <emc2@gmail.com> (without any quotes).

mail() : Works properly but the display name part of the recipient is completely omitted, e.g. in the above example it would only display emc2@gmail.com when the recipient reads it.

smtp : It will send it properly to only emc2@gmail.com, but will rewrite it as Einstein@mail.servername.com, Albert <emc2@gmail.com> which comes through to the recipient in the headers and that's what they see. (mail.servername.com depends on the server.)

sendmail without -t option: Same as smtp

sendmail with the -t option: Same as without -t, but tries to also send to Einstein@mail.servername.com, which generates a bounce.