Explanation
The on-premise Active Directory domain is named contoso.local. Therefore, all the domain users accounts will have a UPN suffix of contoso.local by default.
To enable directory synchronization that will use password hash synchronization, you need to configure the domain user accounts to have the same UPN suffix as the verified domain (contoso.com in this case). Before you can change the UPN suffix of the domain user accounts to contoso.com, you need to add contoso.com as a UPN suffix in the domain.
Reference:
https://docs.microsoft.com/en-us/azure/active-directory/hybrid/plan-connect-userprincipalname