Retention policy and legal hold

Check out this article if you haven't seen it already - https://blogs.technet.microsoft.com/uspartner_ts2team/2014/01/09/litigation-hold-versus-in-place-hold-in-exchange-online/. Basically, Litigation Hold was the original way to preserve data but a more flexible method became available subsequently called In-Place Hold.  Either can be used in Office 365 depending on the requirements. See the In-Place Hold and Litigation Hold section in the https://technet.microsoft.com/en-us/library/exchange-online-message-policy-recovery-and-compliance.aspx.

There are some https://technet.microsoft.com/en-gb/library/ff637980(v=exchg.150).aspx though:

"We've postponed the July 1, 2017 deadline for creating new In-Place Holds in Exchange Online (in Office 365 and Exchange Online standalone plans). But later this year or early next year, you won't be able to create new In-Place Holds in Exchange Online. As an alternative to using In-Place Holds, you can use https://go.microsoft.com/fwlink/?linkid=780738 or https://go.microsoft.com/fwlink/?linkid=827811 in the Office 365 Security & Compliance Center."

For Retention tags and retention policies in Exchange Online, that's more to do with how long to keep items for compliance reasons.  We had a setup of 5 years email were kept for using retention but that wouldn't preserve the emails indefinitely if the user went out of their way to delete items, accidentally or otherwise.