License types for users and groups

Microsoft 365 licenses use two assignment models: direct assignment, where an admin manually assigns a license to an individual user in the Microsoft 365 admin center, and group-based licensing, where Microsoft Entra ID (formerly Azure AD) automatically licenses every member of a security or Microsoft 365 group. Group-based licensing scales better in larger organizations by tying access to membership. A license is a prerequisite, not just billing: Microsoft 365 Copilot is a separate add-on assigned on top of a qualifying base plan such as E3 or E5. Removing the license or group membership revokes the associated feature access.