It always uses the entered address as the reply to address, though as stated it is ignored in some email clients.
If you use the entered email address as the from address then replying to the email will always work even in email clients that ignore the reply to.
The downside to using the entered address as the from address is that your smtp server is spoofing that from address which is not part of the domain for the smtp server and doing this spoofing can make it get caught by spam filters and could even possibly have a negative effect on the reputation of your smtp server and it's ip address.
It is much better if your smtp server only sends messages from users it is authoritative for.
Best,
Joe