Clarification of number licenses required.

Ron_Acker I think part of the complexity comes in because the answer to your question is the ever-vague "yes" reply that can often be used with licensing questions.

Group-based licensing is problematic from a license compliance perspective because it's really licensed one of two ways:

1. Through Office 365 E3+/A3+/G3+ (Only for use with groups managing Office 365 licenses.)
2. Through AAD Premium P1+ (For use with any group-based license management, including the use of groups with dynamic membership.)

So the sentence you're asking about depends on the group-based scenario in question.

For example, both of these are true:

• "For any groups assigned Office 365 E3 licenses, you must also have an Office 365 E3 license for each unique member."
• "For any groups assigned AAD Premium P1 licenses*, you must also have an AAD Premium P1 license for each unique member."

If you want to use group-based management for anything but Office 365 E3 (ironically including Office 365 F1), or to use capabilities like AAD groups with dynamic membership, you'd need each user to have a license for at least AAD Premium P1.

*this could also include EMS, Windows 10 subscription activation, etc. - anything that supports group-based licensing. I just used AADPP1 in the scenario to keep it tidy. 

These are the rules as I understand them based on conversations with the AAD team...