With password synchronization, hashes of user passwords are synchronized from your on-premises Active Directory to %BRAND_AZURE_ACTIVE_DIRECTORY%. ...

With password synchronization, hashes of user passwords are synchronized from your on-premises Active Directory to %BRAND_AZURE_ACTIVE_DIRECTORY%. When passwords are changed or reset on-premises, the new passwords are synchronized immediately to %BRAND_AZURE_ACTIVE_DIRECTORY% so that your users can always use the same password for cloud resources as they do on-premises. The passwords are never sent to %BRAND_AZURE_ACTIVE_DIRECTORY% or stored in %BRAND_AZURE_ACTIVE_DIRECTORY% in clear text.