Azure AD Supports User Passwords Longer than 16 Characters

In a Community Portal post, Alex Simon - Microsoft Vice President of Program Management - has abandoned the limit of 16 characters per password in the Azure AD. Unlike a local Active Directory, Azure Active Directory have not supported long passwords or passphrases for cloud-only user accounts. This limit is now lifted. Azure AD now allows up to 256 characters including spaces for user passwords.

Source: Microsoft