Azure AD returns a JWT token to the Office client application and the client application can use this JWT token with Office 365 services on behalf of the user. The identity provider returns a token to Azure AD when the user is successfully signed in. The sign in web page is shown to the user on their device and the user signs in. This identity provider is determined based on the domain as specified in the user’s sign in name. If the user is a federated user, Azure AD redirects the user to the sign in web page hosted by the identity provider of record for the tenant. The identity provider could be Azure AD or a federated identity provider like Active Directory Federation Services (AD FS). Azure AD hosts a web page where the user can sign in. The Office 2013 client application uses the ADAL component to facilitate sign in with Azure AD.
This diagram shows how the updated Office 2013 Windows client applications enables user sign in. The above screenshot shows the default web page from Azure Active Directory (Azure AD), which is used by Office 365. The ADAL based authentication stack enables the Office 2013 clients to engage in browser-based authentication (also known as passive authentication) where the user is directed to a web page from the identity provider to authenticate. Introduction to ADAL based authentication This blog post talks about the new features that are enabled by the ADAL sign-in authentication stack and when you should consider enabling that stack. The updated authentication features will be available in private preview starting with the November 2014 update. The update for ADAL based authentication will be disabled by default for all users of Office 2013 Windows clients, and the previous sign in authentication stack based on the Microsoft Online Sign-In Assistant will continue to be used by default. These new authentication flows are enabled by the Active Directory Authentication Library (ADAL). Later this month we will release an update to the Office 2013 Windows client applications that enables new authentication flows, including support for Multi-Factor Authentication (MFA). We have also published an updated article about the private preview program mentioned in this post.
We have updated the FAQs to provide additional clarification.
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