Emails can loop. As both sender and the recipient have their out-of-office turned on, but both are sending emails anyway. One party sends a message which triggers the others out of office which bounces back and triggers theirs.
The error message is not sent until the out-of-office is turned off otherwise another loop would occur.
Some errors are replies to Spam emails that have been sent the out-of-office message. The spam had an incorrect or fake reply-to address and when the out-of-office message is returned to the fake address that email server sends out an 'unknown' or 'failed' back to you.