Hi Andrew,
thanks for posting that question.
It would be interesting if Microsoft will add support for cloudonly Accounts in the future.
As stated here https://learn.microsoft.com/en-us/azure/storage/files/storage-files-identity-auth-hybrid-identities-enable?tabs=azure-portal#prerequisites:
"This feature doesn't currently support user accounts that you create and manage solely in Azure AD. User accounts must be https://learn.microsoft.com/en-us/azure/active-directory/hybrid/whatis-hybrid-identity, which means you'll also need AD DS and either https://learn.microsoft.com/en-us/azure/active-directory/hybrid/whatis-azure-ad-connect or https://learn.microsoft.com/en-us/azure/active-directory/cloud-sync/what-is-cloud-sync.
In the meanwhile we use MarcelMeurer nice Hydra based workaround:
https://blog.itprocloud.de/Using-FSLogix-file-shares-with-Azure-AD-cloud-identities-in-Azure-Virtual-Desktop-AVD/
Oliver.