A cloud solution that uses sensors on on-premises AD DS domain controllers to detect identity attacks, such as pass-the-hash, pass-the-ticket, or reconnaissance, and compromised identities.
In SC-900 the key is telling it apart from Entra ID Protection: Defender for Identity protects on-premises AD DS; ID Protection evaluates the risk of cloud identities (Entra ID). Both integrate into the Defender portal.
Microsoft Defender for Identity is a concept that can show up on the exam. Check the full guide to see it in context.