When an user wants to use a service in Office 365, no matter what services is, a license needs to be assigned. When a license is used, a license cost needs to be paid. This whole concept, which is called pay what you use, makes totally sense for active data. But what about mailboxes of users who are not active anymore. Of course you can chose to keep these mailboxes active, but that will result in license costs. Microsoft released a concept of inactive users very early in the Office 365 roadmap to deal with deleted mailboxes.
How does it work?
To make a mailbox inactive, it must be assigned an Exchange Online (Plan 2) license so that a Litigation Hold or an In-Place Hold can be placed on the mailbox before it’s deleted. Exchange Online (Plan 2) licenses are part of an Office 365 365 Enterprise E3 and E5 subscriptions. If a mailbox is assigned an Exchange Online (Plan 1) license (which is part of an Office 365 365 Enterprise E1 subscription), you would have to assign it a separate Exchange Online Archiving license so that a hold can be placed on the mailbox before it’s deleted.
So it is important to understand that you need an advanced license for this.