Overview: Windows 10 (Pro & Enterprise editions) allow the user account to be an Office 365 user. This is recommend, since it allows a true SSO (Single Sign On) experience; all of the Office 365 services seamlessly work without requiring additional sign on. Advanced security features, such as remote machine wipe, also become available from the Office 365 portal.
If the version of Windows 10 is "retail" (not Pro or higher), then the user will need to upgrade to Pro. This should be verified first by right-clicking the Windows logo (aka "Start button", bottom-left corner of screen) and choosing System:
For full edition comparison see https://www.microsoft.com/en-us/WindowsForBusiness/Compare
Scenario 1: a new computer (or clean install)
When Windows 10 is started up for the first time a Pro or Enterprise/Education edition will check if it has Internet connectivity, and if so you can choose to Join Azure AD (this will use your Office 365 logon credentials). If there is no Internet connectivity then you will have to create a local account instead, then use scenario 2 to join an existing computer to Azure AD.
Scenario 2: an existing computer *** Since Jul-2018 this process has changed - see end of article ***
Once logged into Windows 10 click the Windows logo > Settings
From the Settings menu choose System...
...and choose the last menu option About
Click the button Join Azure AD to begin the process...
The next steps are simply a case of entering the email address and password of a valid user:
*** Jul-2018: The Windows 10 interface options have changed ***
After adding a "Work/School" account to the the Account Settings area, notice the menu item "Access work or school" and the option "Connect".
When clicking "Connect", notice beneath the email field an option "Join this device to Azure Active Directory" - this is the option you need!
Logging onto Windows using Microsoft 365's Azure AD credentials
Restart the computer to be presented with the new logon option and choose Other User:
Once the Office 365 email address and password have been authenticated ("Your work or school account") Windows 10 will create a profile for this user...
It is important that you agree to Enforce these policies (Office 365 is no able to remote wipe, manage users, and so on)
You will be prompted to create a PIN and verify the account via TXT message...
Complete! Using the new profile, open a browser and go to http://portal.office.com - notice that you do not need to sign in! You have completed the Single-Sign-On task. You may want to merge/import the existing user settings (from the local computer user account) into this one, so check out our other article about how to do this.