I have been advising all my users to use mail enabled security groups for permissions and sharing content in SharePoint. I know for permissions, best practice is to use mail enabled security groups in SharePoint groups. And this works for mail enabled security groups that are synced from On Prem AD > AAD (a typical hybrid scenario).
However, I came across a case where a few users were not able to share (using the share button in SPO) to mail enabled security groups. I thought this might be a permissions issue or a bug. I raised this request with Microsoft support after doing some troubleshooting and was told this is the intended design. Mail Enabled security groups do not sync with SPO directory.
What is the recommended method of sharing content content from SharePoint? I was advised to create security groups in AAD which would work.