Upon receipt of the MAIL FROM: address, a delivery agent is selected by the RHS of a parse rule set 0 rule, which defines a triple that contains three pieces of information for that address:

$#delivery_agent $@ host  $:address  

The $@ portion of the triple contains the host to which to connect for delivery. For example:

wash.dc.gov

Once that host is determined for the $@ part of the triple, it is copied to this ${mail_host} macro.

${mail_host} is transient. If it is defined in the configuration file or in the command line, that definition can be ignored by sendmail. Note that a $& prefix is necessary when you reference this macro in rules (that is, use $&{mail_host}, not ${mail_host}).