How to generate App Password
If you are using 2FA (Two Factor Authentication) you will need to generate App password and use an app password instead of your login password to synchronize data via Dav.
Login to your Nextcloud in the top right corner click on your avatar and select Settings, navigate to Security and under Devices & Sessions add:
Name the device to your liking and click on Create new app password.
After that Nextcloud will generate a random password that you can use to synchronize via Dav. Use this password in Outlook settings.
Paste your App password instead of your login password as shown on the picture. You will use an app password instead of your password to work with 2FA!