They don't just filter their e-mail platforms and consume hash lists from law enforcement agencies. On the contrary,
Microsoft funds and freely distributes the most common tool for checking photos (not file hash based, I think proprietary). That's likely the project the employees you mentioned were on, a job I wouldn't wish on anyone I know. I hope they were well supported both while working and afterward.
I want to avoid using the term - even though they use it - because it's not a hash function like most people are familiar from computer science. Their "hash" function is resistant to alterations and is more like a "fingerprint".
Edit: to be completely clear, PhotoDNA isn't a cryptographic hash. It's a hash function that maximizes similarity of hashes based on inputs, and is probably closer to a bloom filter in some respects.
https://www.microsoft.com/en-us/photodna