Windows Hello for Business

In Windows 10, Windows Hello for Business replaces passwords with strong two-factor authentication on PCs and mobile devices. This authentication consists of a new type of user credential that is tied to a device and uses a biometric or PIN.

Windows Hello for Business lets user authenticate to an Active Directory or Azure Active Directory account.

if you have only office 365 subscription and windows 10 then also your user able to login through windows hello no need local AD.

Windows Hello addresses the following problems with passwords:

• Strong passwords can be difficult to remember, and users often reuse passwords on multiple sites.
• Server breaches can expose symmetric network credentials (passwords).
• Passwords are subject to replay attacks.
• Users can inadvertently expose their passwords due to phishing attacks.

Cloud Only Deployment

• Windows 10, version 1511 or later
• Microsoft Azure Account
• Azure Active Directory
• Azure Multifactor authentication
• Modern Management (Intune or supported third-party MDM), optional
• Azure AD Premium subscription - optional, needed for automatic MDM enrollment when the device joins Azure Active Directory

Reference:
https://docs.microsoft.com/en-us/windows/access-protection/hello-for-business/hello-identity-verification