We currently federate our Azure AD through Okta. We do not have on-prem AD. Due to to the fact that the manager field in M365 or AzureAD can only be update through on-prem AD when synced, and...
Nope, pure cloud not sure how Okta works exactly but if it has write back it should work but if Okta is involved then I think you'll need to talk to them as it clearly can be added to Azure AD without the need for on prem AD. The limitation appears to be Okta. Just as a reference for others - O365 WS-Federation Okta to Azure AD "manger" attribute sync
"For Okta mastered users unfortunately, even though you have a value added for the Manager, it will not be pushed into O365."