Troubleshooting:
Proxmox use postfix for emailing, you will find logs about mail errors and its causes in /var/log/mail.log


Resolution

Errors: <root@host.domain>: Sender address rejected: Domain not found (in reply to RCPT TO command))
Fix: add the compalined email (root@host.domain) in your mailserver, also if needed you can alter your myhostname in /etc/postfix/main.cf

Error: Recipient address rejected: Greylisted
Fix: Greylisted is enabled on proxmox, if email got rejected then retried will cause it to be greylisted, it will be auto removed after while, and start working again or you can optionally (discouraged) disable greylisting in proxmox, check http://projects.puremagic.com/greylisting/whitepaper.html