Yes, Magento 2 SMTP settings can override server-level email settings. When an SMTP module is active, Magento sends all emails through the SMTP details added in the admin panel. This process does not use the servers default mail function. Magento 2 Custom SMTP Extension uses the custom host, port, username, password, and encryption you set. The only requirement is that the server must allow outbound SMTP connections. If it does, Magentos SMTP settings take priority. This helps emails reach inboxes more reliably. It also gives better control over email delivery and security.