Hi,
Yes, passwords will need to meet domain requirements as well as Azure AD Password Protection, assuming you have Passwords must meet complexity requirements Enabled. And if you have any other password filter dlls (besides AAD Password Protection), the passwords would need to be acceptable to those as well.
All of the password filters installed on the system must return true for a password to be accepted.
Some references if you would like to learn more:
https://learn.microsoft.com/en-us/windows/win32/secmgmt/strong-password-enforcement-and-passfilt-dll
-TP