Answered my own question. DirSync copies the AD objects into the Office 365 "directory", as required to have a mailbox or other entities. I thought with ADFS we were allowing this data to be queried by Office365, but apparently ADFS is only for token/SSO. It doesn't provide a way to share AD structure.
I don't like the ideal of synchronizing. I'd rather enable Office365 to talk to one of my DC's via a VPN, but I guess this is the best we can do.
