Explanation:
You can find the file Document1.docx deleted by User1 in the Preservation Hold library.
SharePoint and OneDrive store content that needs to be retained in the Preservation Hold library.
The Preservation Hold library is created as soon as an item to be retained is deleted or edited. It can be found on the Site contents page and is visible only to site collection administrators. The Preservation Hold library is used only when content has retention labels, retention labels declared as a record, or retention policies applied to it.
You can find the email deleted by User2 in the Recoverable Items folder. The Recoverable Items folder in Exchange Online is used to protect items from accidental or malicious deletion. The folder is also used for discovery during litigation or different investigations. This folder replaces the dumpster folder, used in earlier Exchange versions. The Recoverable Items folder contains subfolders such as Deletions, Versions, Purges, Audits, DiscoveryHolds, Calendar Logging, SubstrateHolds. If an email is subject to a retention policy, it is held in the Recoverable Items folder until the retention period is over. Subsequently, the item is permanently deleted after a default retention period of 14 days. The default retention period for mailboxes can be modified for up to a maximum of 30 days.
None of the items will be moved to the Substrate Holds subfolder. The Substrate Holds subfolder is used when In-Place Holds, Litigation Holds, or Microsoft 365 Teams Chat retention policies are enabled. In the case of enabled retention policies, the original copy of the Teams messages is saved after the message is modified or deleted. This folder is not visible to end users. In the scenario, users are looking for items deleted in SharePoint and Exchange Online only, which are neither In-Place Holds nor Litigation Holds.
None of the items will be moved to the First Stage or Second Stage Recycle Bin. The purpose of the First Stage Recycle Bin is to store documents that are not modified or deleted during the preservation time. After the preservation time is over, the timer job relocates this content from the Preservation Hold library to the first-stage Recycle Bin. After 93 days, the documents are permanently deleted. If the user deletes an item from the First Stage Recycle Bin, it is relocated to the Second Stage Recycle Bin. The 93-day retention period includes both First and Second Stage Recycle Bins.