Thank you for inquiry and welcome to Microsoft Q&A.
Allow me to clarify your concern, the on-premises Exchange server in your setup (with Azure AD Connect for directory synchronization but no hybrid configuration) serves a specific, limited purpose: it provides the necessary schema extensions to Active Directory and management tools (like the Exchange Admin Center or PowerShell) for handling Exchange-related attributes of user accounts in your on-premises AD. These attributes, such as proxyAddresses
(email aliases), legacyExchangeDN
, showInAddressBook
(for GAL visibility), and others, these attributes then synchronized to Azure AD and Exchange Online via Azure AD Connect.
For more detail, you can refer via: Exchange Server hybrid deployments
You also concern If this is needed?
The answer is yes, as long as Azure AD Connect is syncing your on-premises AD to the cloud, Microsoft recommends keeping at least one on-premises Exchange server (or equivalent management tools) for proper attribute management and support. Decommissioning it entirely would break the ability to manage synced users' Exchange attributes without workarounds, which aren't officially supported. If you're not actively using the on-premises EAC for changes, it might be idle but still essential for the schema/sync foundation.
Additionally, you mention "Organization Sharing Settings". The similarity you're seeing here is probably coincidental or a remnant of initial setup. In a non-hybrid environment, these settings (e.g., for external calendar sharing or federation) aren't actively integrated between on-premises and online. They might appear similar if manually configured the same way, but the on-premises server isn't facilitating any cross-organization sharing with Exchange Online. If you're not using features like federated sharing, this overlap isn't providing value and could be ignored or reviewed for cleanup.
If you have any additional concern, feel free to comment below. I be more than happy to assist.
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