
Explanation:

Box 1: The Azure AD Connect provisioning agent
Install the Azure AD Connect provisioning agent
How is Azure AD Connect cloud sync different from Azure AD Connect sync?
With Azure AD Connect cloud sync, provisioning from AD to Azure AD is orchestrated in Microsoft Online Services. An organization only needs to deploy, in their on-premises or IaaS-hosted environment, a light- weight agent that acts as a bridge between Azure AD and AD. The provisioning configuration is stored in Azure AD and managed as part of the service.
Box 2: Server1 or Server2 only.
Cloud provisioning agent requirements include:
* An on-premises server for the provisioning agent with Windows 2016 or later.
This server should be a tier 0 server based on the Active Directory administrative tier model. Installing the agent on a domain controller is supported.
Note: Windows Server Core is a minimal installation option for the Windows Server operating system (OS) that has no GUI and only includes the components required to perform server roles and run applications.
Reference:
https://docs.microsoft.com/en-us/azure/active-directory/cloud-sync/how-to-install
https://docs.microsoft.com/en-us/azure/active-directory/cloud-sync/how-to-prerequisites