Microsoft today announced that they are blocking the ability to create a new personal Microsoft account using a work/school email address, when the email domain is configured in Azure AD.
Creating a personal Microsoft account using word address is not a good idea in general. Users who leave an organization generally loose access to their work email address. When they do, they may not be able to back into their personal Microsoft account if they forget their password. Also, their IT department could reset their password and get into the personal account of former employees. There are several other bad issues when you do this. To avoid this problem, Microsoft is blocking the ability to create the Microsoft Account. If your organization uses Office 365 or other business services from Microsoft that rely on Azure AD, and if you’ve added a domain name to your Azure AD tenant, users will no longer be able to create a new personal Microsoft account using an email address in your domain.
Microsoft also revealed that there are about 4 million people have a personal Microsoft account with a work/school email address as a username. The sign-up block mentioned above only prevents the creation of new accounts. It has no impact on users who already have a Microsoft account with a work email address. If you are already in this situation, Microsoft is recommending users to rename their personal Microsoft account. Renaming your personal Microsoft account means changing the username, and does not impact your work email or how you sign in to business services such as Office 365.
Read more about this here.