Hi pallab,
All of the main limitations are described in this article. https://learn.microsoft.com/en-us/azure/active-directory/users-groups-roles/directory-service-limits-restrictions
There are limits to the number of managed domains and resources you can create, and there are restrictions around group syncing.
This document also describes a lot of the precautions and considerations:
https://learn.microsoft.com/en-us/azure/security/fundamentals/choose-ad-authn
If they're looking for a truly cloud-only setup, they should note that Azure Active Directory is not designed to be the cloud version of Active Directory or a replacement for an on-premises Active Directory. It is not a domain controller or a directory in the cloud that will provide the exact same capabilities with AD. It provides a lot of extra capabilities as well, but the differences should be noted.