Create users in Office 365
When creating accounts in Office 365 there are several types:
1- Cloud Identities which exist only in Office 365
2- Synchronized identities: Exist in AD DS and Office 365 and they Are managed in Active Directory for your company.
3- Federated identities:
If you have an existing Active Directory environment on-premises, you can integrate Office 365 with your directory by using federated authentication to manage authentication and identity services for your users in Office 365.
For today let us create users using cloud identities way by creating users and assigning them licences direct from Office 365.
Go to office.com, then admin then press on left tree and select users it will expand the Users menu where you can create users, contacts (they are just like phone contacts no emails or licenses ),and delete users.
Press on Add User.
Then start filling the data
Like below
You will now need to select the product license
Once you select it and press okay, you can send email to admin or any one to notify the creation.
Now user is created and has licenses assigned, you can select type of license you need as appropriate for your company.