What happens if a dynamic group is created and some of the members don't have an AAD Premium license assigned to them? Is there account excluded from the group? Is a warning provided? Are these groups audited by MS?
This is an issue that has been discussed ever since Microsoft introduced AAD dynamic groups. Any account that comes under the scope of a query used for an AAD dynamic group - including those used for Office 365 dynamic groups - require a license. End of story.
The issue does not arise for enterprise tenants who license AAD premium for other reasons (like writeback to an on-premises AD). It does if you have no other reason to use AAD premium...
Best Response confirmed by
Dean Gross (Respected Contributor)