Summary
Normalization rule for extension to 10-Digit dialing
Instructions
From the Teams Admin Center, Go to Voice Menu, and select Dial Plan.
Click into your default org dial plan, you will see a button +(add new rule)
Once you click + to add a new rule (the menu on the right will appear)
Name: Enter the extension number (3- or 4-digit extension)
Description: Enter the extension Number (3-or-4-digit extension)
Rule Creation Mode: Advanced
If Condition: (the number dialed matches this regular expression ^\b123\b)
Then do this: Add +1 and the 10-digit number

Note:
Normalization Rules and Auto Attendant Extension Dialing do not pull Extension Data from the same places
Additional Information
For additional information see Microsoft articles here:
Create and manage dial plans - Microsoft Teams | Microsoft Learn
What are dial plans? - Microsoft Teams | Microsoft Learn