The cloud-only model is used as Software-as-a-Service (SaaS). Microsoft has your identity and manages the Skype for Business infrastructure. You can also have some add-ons, such as Microsoft's cloud-hosted Private Branch Exchange (PBX) and the Public Switched Telephone Network (PSTN) calling service:
In cloud-only scenarios, organizations use the Skype for Business service only on the Microsoft infrastructure.
You can learn more at https://docs.microsoft.com/en-us/skypeforbusiness/skype-for-business-online.
