sendmail - DSN: Name Server host not found

I've recently setup a new backup server and have configured sendmail with a smart_relay_host

Except every email from the command line doesn't go anywhere. From mail.log:

Oct  3 14:32:52 *****back01 sm-mta[16570]: p93DWqtC016568: to=<***.***@***.com>, ctladdr=<root@*****back01.****.****.local> (0/0), delay=00:00:00, xdelay=00:00:00, mailer=relay, pri=120762, relay=10.2.30.60, dsn=5.1.2, stat=Host unknown (Name server: 10.2.30.60: host not found)
Oct  3 14:32:52 *****back01 sm-mta[16570]: p93DWqtC016568: p93DWqtC016570: DSN: Host unknown (Name server: 10.2.30.60: host not found)

DNS is working correctly on this box. I can do forward and reverse lookups.

I can also telnet to the mail relay and send a message that way.

I'm stumped. Any suggestions?

Name server: 10.2.30.60: host not found tell me, what this NS (10.2.30.60) can't resolve name for your smart-relay, isn't it? Just try to resolve host from SMART_HOST definition (and connect to it later)