Recently had a tasks of completing a synched 365 user to a cloud only user.
There is no easy way to convert a synched user to a cloud only user. The only process I could find was as follows.
1. Create a new OU on AD on-prem which is not synched.
2. Move the users from the syched OU to the non-synched OU.
3. Perform a delta synch with Azure Ad connect.
4. This should move users into the O365 deleted items container.
5. Restore the user from there and make a cloud only user.
There should be no data loss throughout the process i.e. no email data loss, licenses may need to be re-applied.
This process will also maintain users MFA settings, BUT PASSWORD WILL NEED TO BE RESET!