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When using SharePoint Online you can define applications in Azure AD and these applications can be granted permissions to SharePoint, but also to all the other services in Office 365.
How to get Azure AD app only access?
To do that, you have to create and configure a self-signed X.509 certificate, which will be used to authenticate your Application against Azure AD, while requesting the App Only access token.
How to grant admin consent for Azure AD app?
Click on the “Grant admin consent for ” button and confirm the action by clicking on the “Yes” button that appears at the top. If you want to use this AAD App Only principal with PnP PowerShell, after you have installed the PnP PowerShell module, you can connect to your SharePoint Online environment using:
Where can I find Azure AD application proxy?
For more information about application authentication types, see Managing Certificates for Federated Single Sign-On in Azure Active Directory and Password based single sign on. With Microsoft Azure AD Application Proxy, you can provide access to applications located inside your private network securely, from anywhere and on any device.
Why do Office 365 apps need to be registered in each environment?
Fundamentally this is because both Office 365 apps and (typically) SharePoint Add-ins need to be registered in each environment where the app will be used – and this gets problematic because each registration gives a different client secret and password, but your app typically only caters for one.
But Office 365 apps are becoming “the new normal” for app development in Office 365, not least because you can step outside of the Office 365 APIs and use good old-fashioned SharePoint CSOM/REST APIs if you need to (but without having to use SharePoint app authentication ).