I opened a case with Microsoft on this. The answer I received did not make me feel warm and fuzzy, but I include it below. They could not give a clear answer on when this service will start working, what will happen if it is left disabled, or anything else of that nature. Without further ado...
Incident Description:
Local KDC service failing to start on Windows Server 2025 after December 2024 updates.
Expected Outcome:
Understand why the service is failing to start and what actions are needed to resolve the issue.
Environment:
Company had implemented around 7 Windows Servers 2025.
Company already promoted at least one of the servers as Domain Controllers and the goal is to continue refreshing DCs with the latest version of Windows Server.
Company discovered that other customers are also facing the same issue with Local KDC service as published in the link (link is to this thread).
Troubleshooting
MS Support performed internal research and discovered similar incidents reported.
As per Product Group analysis from previous cases, the local KDC feature is currently not in General Availability (GA), even though the service may be shown in OS.
Microsoft Product Group is actively working on this feature. Once it is ready for public preview, there will be more communication and updates provided via public article.
MS Support recommendation:
- Disable the service on all your Windows Server 2025 servers, as this is a new feature that shouldn’t impact applications or other services.
- Continue applying Updates to your Windows Servers.