Once a Licensed Mailbox is converted to a Shared Mailbox on the M365 end, our system detects the change and considers it a Shared Mailbox. Therefore, it would free up the license. The previously backed-up OneDrive data would still reside as a backup, and the user can use it when required.
If a Shared Mailbox is assigned with an Exchange License on the M365 end, it will utilize a license in our system.