Microsoft along with other major tech companies are bringing Passwordless sign-in to make it safer and easier to login to major platforms including Microsoft 365.
According to a recent article published by The Verge:
By making logins contingent on a physical device, the idea is that users will simultaneously benefit from simplicity and security. Without a password, there will be no obligation to remember login details across services or compromise security by reusing the same password in multiple places. Equally, a passwordless system will make it much more difficult for hackers to compromise login details remotely since signing in requires access to a physical device; and, theoretically, phishing attacks where users are directed to a fake website for password capture will be much harder to mount.
Microsoft is already supporting the capability to login to Microsoft 365 without a password. To setup passwordless login for Microsoft 365, you will need to use the Microsoft Authenticator app.
Follow the official Microsoft documentation here to setup passwordless login to Microsoft 365 in your organisation.