Explanation:

Microsoft Defender for Identity (formerly Azure ATP) is designed to protect on-premises identity infrastructures by analyzing signals from Active Directory Domain Services (AD DS). In Microsoft's SCI guidance, Defender for Identity is described as a "cloud service that uses sensors installed on your domain controllers to monitor and analyze user activities and information across your on-premises Active Directory." The sensors "collect authentication, replication, and other security-relevant events and network traffic," enabling analytics to detect techniques such as Pass-the-Hash, Pass-the-Ticket, Golden Ticket, reconnaissance, lateral movement, and domain dominance. The product's purpose is to surface advanced threats, compromised identities, and malicious insider actions by continuously profiling and learning from AD DS behavior and security events.
While Defender for Identity integrates with other Microsoft security solutions (for example, Microsoft 365 Defender and Microsoft Defender for Cloud Apps) to enrich investigations, it does not rely on Azure Active Directory (Microsoft Entra ID) signals for its core detections, nor does it collect telemetry from Azure AD Connect itself. Instead, its foundational telemetry source is on-premises AD DS domain controllers via lightweight sensors, which provide the deep authentication and directory-service context required to identify sophisticated identity-based attacks in hybrid environments.