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I have an SP Online E3 account that I use for practice. Other than perhaps running a VM with Active Directory, have you any other ideas on how to practice connecting an on-prem AD to a SP Online via 0365 Azure AD?

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You certainly don't want to use a production domain for this, so yes, create a VM with AD that hosts its own domain for testing. The VM could run locally in your own data center, or spin up a server in Azure. Of course, part of the complexity of migrations comes from email, so perhaps add an exchange server to the mix as well. Again, hosted locally or in Azure. I'd also create a powershell script to create a few thousand users for testing, or use this one that was provided on a technet blog.

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