The licensing panel is where you can monitor your current license usage, and see if you are either overprovisioned, or underprovisioned for your licensing. 

If you have a large number of licenses that are not being assigned to people, you can consider reducing your license count to save some money on your monthly subscription. Mind you it's definitely a good idea to keep a few extra licenses on hand to allow your administrators to quickly provision new users without having to wait for license request to be approved. Ultimately this will come back to your business process, and how you handle the billing in your M365 subscription. 

If you're relatively small, and simply adding and removing licenses as needed on a monthly basis, you don't need to keep any extra licenses in stock. When you provision a new user, you have the option of automatically purchasing new licenses to assign to them at the same time. 

If you're a larger customer, with a CSP subscription, or an enterprise agreement, you might need to work with a partner or a licensing provider to get additional licenses added to your tenant. Depending on your user onboarding workflow, this might take some time, at which point having a few extra licenses is a really good idea. Also, depending on your licensing model, you might not be able to reduce your license count immediately. 

If you're using retail licensing for instance, just billing against a credit card every month, you can increase and decrease your licenses on the fly, and receive prorated billing rates for that month. Under CSP or EA agreements, you might be restricted to reducing your license count only on a monthly basis. Or potentially, only when your EA is renewed. Make sure you keep these factors in mind when considering your licensing strategy. 

Now from the subscriptions page, you can click on the option to assign licenses to your users, which takes you over to the Active Users page. So we can see here that we have 25 licenses, four of them are assigned, and we're gonna go ahead and click on assign to users. This takes us over to our Active Users page, and we can see the users that we have that do not have licenses assigned to them. From here we can go in and begin to select them and add licenses. 

Another option we have is we go back to Billing, and Subscriptions, and if we click on assigned, it takes us to the view of all licensed users. Similar to if we came to the Users, went to Active Users, and then used the filters to choose either unlicensed, or licensed users. So we choose unlicensed users, we see these ones, licensed users, et cetera. Now you can create custom views in here, which will be really helpful to you, especially if you have multiple licensing subscriptions. 

If you add a custom view, you can choose one that has different levels of licensing. So if you have Enterprise E1 licensing, E3, F1, you can come here and choose your different license options, and have different views for each license stack. As you can imagine because we only have a single license on this one here, the Microsoft 365 business licenses are the only option available to us. But if we go ahead and take our unlicensed users, we can click on them here, and from these three users, we can go ahead and edit their product licenses. Now you have the option of either replacing their existing product licenses, or adding to their existing product licenses. Again, more useful if you have different licensing options and you want to be changing things around while keeping the current licensing stack in place. In this case we're just gonna replace their existing product license assignments, which is none, and go next. Their location's not gonna change, although you could change that here if you wanted to, and we're just gonna assign licenses to these users, and hit, click replace. Close, and then close. And we can just refresh, and you see that everybody has licenses assigned. 

You can do the same in the reverse as well, if you select your users you can go to edit their product licenses, and in this case we're just going to replace, and we're gonna say we want to remove all product licenses from the users. Depending on again, what your workflow is and what you're trying to do, you may or may not want to do this. Also remember that if you are removing users exchange online license, their mailbox gets deleted, and you have about 30 days until that mailbox gets permanently deleted, so you don't wanna be removing licenses for people who you still need to keep active mailboxes in production. You only do this when you are either completely removing their services, you're okay to delete your mailbox, or this is part of your offboarding process. But I can just click replace. Close, and now these two users are unlicensed. And that's basically it.