What gave you the impression that it would work?
Just fyi, any email address ending with a valid TLD, whether or not an SMTP server for that domain actually exists, will work to register accounts with pretty much any site. Depending on the form field validation/sanitization in place, sometimes even random nonsense will work. Now if an SMTP server doesn't exist, obviously sites that require verification of the email address won't work because you'll never receive the email, which was probably the case with aiparadise.moe.
If you really want Lemmy to support a baked in SMTP server, create a pull request. I can almost guarantee you that it won't be accepted though.
If a server provider is insane and actually wants to provide email service they would just host a separate email server on their domain. Pretty much no one does this outside of doing it as an educational exercise.
Many ISPs just outright block SMTP traffic from their resedential blocks, and even some from their commercial blocks unless you specifically pay for it. You're going to have to do a lot more configuration due to things like SPF and DKIM/DMARC. Even after you set everything up most other email providers will just mark you as spam and drop emails from your domain at their email gateway.
Enterprises are even trending away from self-hosting their own SMTP servers, they just offload the entire headache to O365. Places still do self-host Exchange 2016, but it's definitely becoming more rare to see.
Edit - I can absolutely guarantee you that if something like Lemmy included a functional SMTP server in it's Docker deployment, the ratio of legitimate users to spambots would be so heavily weighted towards spambots that it would be accurate to state that sending spam was basically its only purpose.