Azure AD is now Entra ID. Please do not deadname the Microsoft cloud offering (even if we all think it chose kind of a dumb sounding new name 🤫).

And Microsoft is heavily pushing their cloud services of course, but you can still set up on-prem AD as an option as well as other on-prem services.

It's just that all their cross service interoperability stuff won't work as well if it's not all in the cloud. Like, all their stuff is designed to work together in the cloud and keep you entrenched in the ecosystem, like any company I guess, except I actually like using Teams/Office/SharePoint combo, it's executed well.