In this video, I go over deploying Azure AD and configuring replication with an on-premises Windows Active Directory domain and Azure Active Directory.  I review deployment options and how to synchronize passwords from Windows and Azure directory services.  A server is deployed and joined to the Azure AD Domain Services domain and users source from Azure AD and Windows AD log in using same sign-on credentials.

https://docs.microsoft.com/en-us/azure/active-directory-domain-services/tutorial-configure-password-hash-sync#enable-synchronization-of-password-hashes