The Open Authorization (OAuth) 2.0 is the industry protocol for authorization. It allows a user to grant limited access to its protected resources. Designed to work specifically with Hypertext Transfer Protocol (HTTP), OAuth separates the role of the client from the resource owner. The client requests access to the resources controlled by the resource owner and hosted by the resource server. The resource server issues access tokens with the approval of the resource owner. The client uses the access tokens to access the protected resources hosted by the resource server.
OAuth 2.0 is directly related to OpenID Connect (OIDC). Since OIDC is an authentication and authorization layer built on top of OAuth 2.0, it isn't backward compatible with OAuth 1.0. Microsoft Entra ID supports all OAuth 2.0 flows.
https://learn.microsoft.com/en-us/entra/architecture/auth-oauth2