@Kastytis Balciunas Thank you for reaching out to us, As I understand you are trying to configure password policy in Entra ID domain services to apply to Entra ID cloud only users that are synced to domain services.
As far I understand and as per this doc - https://learn.microsoft.com/en-us/entra/identity/domain-services/password-policy A default fine grained password policy is created within Entra ID Domain Services and applied to all users in a Domain Services managed domain, not for the users synced from Entra ID to Entra Domain Services.
If in case you want to have better password protection for the cloud users, refer to this - https://learn.microsoft.com/en-us/entra/identity/authentication/concept-password-ban-bad
Let me know if you have any further questions, feel free to post back.