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Managing UPN suffixes
In Active Directory, users and services can sign in using their pre-Windows 2000 logon name (the value of the sAMAccountName attribute) or their Kerberos user principal name (the value of the userPrincipalName attribute). As Kerberos relies heavily on DNS, the user principal name features an userPrincipalName suffix, in the form of a DNS domain name.
These userPrincipalName suffixes can be added to the list of available UPN suffixes for each Active Directory forest.
By default, this list already contains the DNS domain names of the Active Directory domains in the forest.
UPN suffixes in on-premises Active Directory environments do not need to be publicly routable. Only if you intend to use them with the federation and/or hybrid identity then they need to be. In many organizations, a cloud journey begins with changing the UPN suffix on all the user objects that need to be cloud-enabled to a publicly-routable UPN suffix. Some organizations have adopted .local as their top-level domain name, and this is the prime example of a non-publicly-routable top-level domain name.