We saw several service request where our customer want to restore a backup taken in Azure SQL Managed Instance to SQL Server OnPremise and they are getting the following error: Msg 3169, Level 16, State 1, Line 1 The database was backed up on a server running version xx.xx.xxxx. That version is incompatible with this server, which is running version xx.xx.xxxx. Either restore the database on a server that supports the backup, or use a backup that is compatible with this server.
Msg 3013, Level 16, State 1, Line 1
RESTORE DATABASE is terminating abnormally.
That error came because Native COPY_ONLY backups taken from managed instance cannot be restored to SQL Server because managed instance has a higher database version compared to SQL Server. For more details, see Copy-only backup.
Due to this limitation, I would like to suggest to use bacpac method or if you need to have updated both environments at the same time use transactional replication.