> I didn't think that 587 requires AUTH;

It does. That's its entire point.  (Read the RFC.)

> I was pretty sure that I have used
> submit on localhost,

That (and what you described after) isn't 'submission'.  Port 587 is all about 
authenticated SMTP-like email submission.

Talking to sendmail on 127.0.0.1 or ::1 isn't the same thing.

Long ago I taught sendmail to listen on named sockets.  I had a crazy idea that 
/var/run/submission might become the default submission interface for local 
email.  Sadly, it never caught on.

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