Azure AD has a history of outages which have caused problems for Microsoft 365 tenants over the years. Microsoft hopes to solve the problem with a backup authentication service that’s capable of keeping things going if the primary Azure AD service goes offline. Basically, the backup service has copies of successful authentications over the last three days which can be used to process authentication requests for most sessions when the primary service fails. It seems like a good idea.
The OneDrive sync client is an important Microsoft 365 component which underpins features like autosave and coauthoring of Office documents. During the March 15 Azure AD outage, the client had a meltdown and removed all the local copies of files stored in a SharePoint Online folder, seemingly because it couldn’t authenticate. The problem was easily fixed, but it’s a bad example of handling what could be a transient authentication issue.