Hi mike71581,
If the UPN is internal UPN such as domain.internal, after Dirsync, there will be domain.onmicrosoft.com account in Office 365. We need to add UPN that public to the Internet and verify the domain in Office 365 So that domain.internet account will be synced to Office 365.
With Dirsync enabled, some attributes must be changed on the local such as Exchange proxy address and user display name. You can refer to http://support.microsoft.com/kb/2256198
When you create a new user in AD, after Dirsync, the user will be synced to Office 365 even though you have not enough license. You can Configure filtering for directory synchronization to filter users who don't sync to Office 365.
UPN is not related to email address. When we access Office 365 service such as portal, we enter the user’s UPN rather than an email address. So, UPN can be different with email address.
Thanks,
Johnny Zhang