I have a droplet with a domain xyz.com but with the email for xyz.com hosted on Gmail. Sendmail works perfectly, except when sending email from my droplet to an @xyz.com address, in which case it gets dumped to a dead.letter file.

Initially I thought that sendmail knows that the server it's running on is xyz,com and so doesn't bother sending any messages off-server (to Gmail), but I've removed all references to xyz.com from /etc/hosts and /etc/hostname

What can I try next?