
Explanation

In the Cloud Apps section, you need to select the name of the app (App1) that the policy will apply to.
In the Grant section under Access Controls, there is a checkbox named "Require Multi-factor Authentication".
That checkbox needs to be ticked.
Reference:
https://docs.microsoft.com/en-us/azure/active-directory/conditional-access/best-practices
https://techcommunity.microsoft.com/t5/Enterprise-Mobility-Security/Conditional-Access-now-in-the-new-Azur