I have found that dynamic group membership (AAD Groups and O365 Groups) has a way to automatically update group membership based on Reports To, and it looks like it is for direct report only.
Is it possible to leverage AAD dynamic group membership to roll up based on hieararcy/reporting chain?
Lets say we have 4 IT Groups, each with a separate manager, that all report to an IT VP, the rule would say "reports to the IT VP" and that would get all members of IT in the dynamic membership.
I beleive it's only for "direct managers", you are probably able to work around this by using deparment/jobtitle combination. Or you can always use custom attributes.