This is a case example of a Microsoft Office 365 environment, which can be described as a SaaS type of service. The Microsoft Office 365 is a collection of software provided Software-as-a-Service (SaaS) to integrate common office applications to company's software repertoire. It consists of tools like Microsoft Word, Microsoft Excel, Microsoft PowerPoint, Microsoft OneNote, Microsoft Outlook, Microsoft Publisher & Microsoft Access, OneDrive storage and Skype for Business.
Microsoft 365 or Office 365: Hybrid deployments are supported in all Microsoft 365 and Office 365 plans that support Azure Active Directory synchronization. All Microsoft 365 Business Standard, Business Basic, Enterprise, Government, Academic and Midsize plans support hybrid deployments. Microsoft 365 Apps for business and Home plans don't support hybrid deployments.
A hybrid deployment offers organizations the ability to extend the feature-rich experience and administrative control they have with their existing on-premises Microsoft Exchange organization to the cloud. A hybrid deployment provides the seamless look and feel of a single Exchange organization between an on-premises Exchange organization and Exchange Online. In addition, a hybrid deployment can serve as an intermediate step to moving completely to an Exchange Online organization.
The connection between clouds is done by configuring the protocols, ports, and connection endpoints in the firewall that protects on-premises organization.