Data migration is the process of securely migrating data from your on-premises SQL Server or Azure SQL instance to your Business Central online/ LS Central SaaS.
The process uses the Azure Data Factory (ADF) to directly migrate the data between databases, meaning it does not look at any permissions within the applications you are transferring data between, only SQL permissions.
When you have finished the setup testing, you migrate the on-premises database to the LS Central SaaS tenant.
Why do the initial setup on-premises, and why not do it directly in LS Central SaaS?
You can do it in LS Central SaaS, but it is faster to import data into an on-premises database, test extensions, and debug errors there, than in LS Central SaaS. Microsoft has put in a great effort to speed up the migration process, while there are still some challenges with importing large configuration packages.