Correct Answer:
Explanation/Reference:
Note:
* From Scenario:
/ Use Active Directory Federation Services (AD FS) 2.0 to authenticate Contoso employees, partners, and customers.
/ Automate the sign-in experience by using the local AD FS 2.0 servers for AD FS single sign-on (SSO).
* Implementing SSO for Office 365 is indicative of setting up ADFS 2.0
By default (the only supported DirSync scenario), passwords are not synced to Office 365 by Directory Sync. ADFS is required in order to use on-premises passwords for Office 365.
* Directory synchronization is the synchronization of directory objects (users, groups, and contacts) from your on-premises Active Directory environment to the Office 365 directory infrastructure. The Microsoft Online Services Directory Synchronization tool is used to perform this synchronization.
Reference: Active Directory Synchronization in Office 365