By default, whenever you create an Application User, the Name of the Application User is set automatically based on Registration App Name and there is a feature available in Dynamics 365 CE online to sync the Registration App Name to Application Username or update the App name in AAD and sync back the Application username to Dynamics 365 CE.
Follow the below steps to do the same.
Pre-requisite:
Follow the below articles and create a Registration App in Azure Active Directory and create an Application User in Dynamics 365 CE Online.
- How to Register an App in Azure Active Directory for Dynamics 365 CE Online?
- How to create an Application user in Dynamics 365 CE Online?
If you already have done the above 2 Pre-requisites earlier, then go to Step 1.
Step 1: Login to Power Platform Admin Center (PPAC) with your credentials.
If you are using US Government (GCC, GCC High and DOD) Cloud, click on the article link and find your related URL and login to PPAC.

Step 2: Click on Environments.

Step 3: Click on the required Environment.

Step 4: Click on Settings.

Step 5: Click on Users + permissions to expand.

Step 6: Click on Application users.

Step 7: Click on the 3 Vertical dots on the Application user and click on Details.
Or
Select the required Application user record and Click on Details on the Ribbon.

Step 8: My Azure Active Directory app name is “Dynamics 365 App” and the Application username is “# Dynamics 365 App” created by the system automatically.
Click on Refresh button, which will sync the App Registration Name from Azure Active Directory to CE.

Name Sync is in progress.

Application Username is updated as per the Azure Active Directory.

You can see the Application username in the list as per the Azure Active Directory.

Note: Refresh button will be shown if the Name is not matching between Registration App in Azure Active Directory App Name and the Application username in CE.
As the Names are in Sync, you cannot see the Refresh button.

Hope you have successfully synced the name from Azure Active Directory to Dynamics 365 CE online.
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