Hi @kanupriya ,
Thank you for contacting the Q&A community.
The "Do not configure" option is used when you already have a 3rd party federation solution in place. You manage the trust between Azure and your Federated site.
https://learn.microsoft.com/en-us/entra/identity/hybrid/connect/how-to-connect-install-custom
When you select the ADFS option, Azure AD connect manages the Azure AD trust between to your ADFS farm.
https://learn.microsoft.com/en-us/entra/identity/hybrid/connect/how-to-connect-azure-ad-trust
Sign in by using an earlier version of AD FS or a third-party solution
If you've already configured cloud sign-in by using an earlier version of AD FS (such as AD FS 2.0) or a third-party federation provider, you can choose to skip user sign-in configuration through Microsoft Entra Connect. This will enable you to get the latest synchronization and other capabilities of Microsoft Entra Connect while still using your existing solution for sign-in.
For more information, see the Microsoft Entra third-party federation compatibility list.
https://learn.microsoft.com/en-us/entra/identity/hybrid/connect/plan-connect-user-signin#sign-in-by-using-an-earlier-version-of-ad-fs-or-a-third-party-solution
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