Hi @Amir-G , You're absolutely right to be confused about why you'd keep on-prem Exchange in a hybrid setup if you’re syncing passwords with Entra ID (Azure AD). Let me clear this up:
Hybrid mode requires an on-prem Exchange server to manage certain mailbox features.
When you set up Entra ID (Azure AD Connect) for password synchronization, it syncs user passwords from your on-prem Active Directory to Office 365, ensuring users have the same password for both environments (on-prem and cloud).
Password syncing makes logging into Office 365 seamless, but it doesn't replace the need for an on-prem Exchange if you're still using a hybrid setup.