The "sender domain" is required because ILO will use it's host name + that domain name as the "from" address.
For example, if you set that to "test.com" and your ILO has a hostname of "ILO-server", the email will be sent to the "email address" with a "from" of "ILO-server@test.com".
It actually uses the ILO's fqdn, so it may show the from address as "ILO-server.mylan.domain@test.com"... so if you have ILO using a FQDN, just be expecting that.
For example, if you set that to "test.com" and your ILO has a hostname of "ILO-server", the email will be sent to the "email address" with a "from" of "ILO-server@test.com".
It actually uses the ILO's fqdn, so it may show the from address as "ILO-server.mylan.domain@test.com"... so if you have ILO using a FQDN, just be expecting that.