I've just watched a Microsoft jump-start video on how to integrate Windows Azure AD (AAD) with your on-premise AD infrastructure. By doing so, your users can experience seamless authentication experience between public Windows Azure (e.g. Office 365, Sharepoint online etc) and on-premise network. Here is the link: AD to Windows Azure AD.
In summary, there are 3 possible options:
1) No integration. Users logon to Azure and on-premise AD separately with different sets of credential.
2) Directory sync (DirSync) only: On-premise AD user accounts and password hashes are synced to Azure. Users logon to both using same set of credential. No Single Sign-On (SSO) between AD and AAD. In other words, users have to authenticate twice, even though they may use the same set of user ids and passwords.
3) AD Federation (ADFS with DirSync): AD user objects (but no password hash) are synced to Azure. Establish one-way federated trust (i.e. Azure trusts your AD). This option supports SSO and even smart card authentication.
Very useful information easy to understand. Thanks.
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