removal/hiding of unused Outlook 365 left panel items

Archive, Scheduled, Conversation history, Filer_Snooze and Clutter are all created when you use a related service. I.e Archive is created when you right click a message and choose the Archive option.
All other folders are standard.
My point is that all the folders in your screenshot exist because a related service is actively being used or had been in the past.

I mean you technically kind of can. You just collapse the username@domain entry after adding the ones you want to the favorites, then you only have the folders you want to show in the favorites section without all the noise there.