Hi Daniel,
Yes that is correct, Microsoft 365 E3, and Microsoft 365 Business Premium includes Azure AD Premium P1 it is charged separately As a test you can unassigned P1 license and use only E3 License for a user to test all the aspects of Entra ID such as MFA, Conditional Access policy.
https://learn.microsoft.com/en-us/azure/active-directory/authentication/concept-mfa-licensing
Hope this helps.
JS
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