Microsoft Bookings for Office 365

All I can say is 'working as designed'. Bookings does not do a free/busy lookup to Exchange Online and maintains it's own set of available hours when staff can be booked. It's not really designed for people running a full Office 365 setup where they sit at a desk managing their own calendar. It's really designed for people like Pet Groomers who might have an owner/manager with Office 365 (hence why it does allow the creation of appointments also directly into Calendar) but the majority of the booked staff are grooming animals all day and would manage their schedule fully within the Bookings app. I understand why you think this is sub-optimal compared to calend.ly. I had to read through the product specs again myself. It would be interesting to see if it has been architected to be outside your Office 365 tenant without access to your free/busy lookup, for security reasons (guessing). Does calend.ly do the integration by providing your Office 365 authentication details to that service?