Windows 365 is Microsoft's Cloud PC service. It delivers a Windows desktop from the cloud to devices running Windows, Mac, iOS or Android, which Microsoft presents as a way to work securely and flexibly with PCs in the cloud. The desktop, its applications and its content run on the service rather than on the user's own device.
Microsoft is headquartered in Redmond, Washington, so US law applies to the provider. Microsoft's EU Data Boundary change log states that Windows 365 is fully compliant with the boundary, with a small number of Cloud PCs that had not yet been moved. The trust centre describes EU Data Boundary commitments and EU Standard Contractual Clauses for transfers, but does not state where data is stored by default. For a European organisation the boundary is a contractual residency option, but US jurisdiction over the provider remains, so the region and any exceptions should be confirmed in the contract.