Azure Local does not require VMs to be domain joined. Please make it optional during VM creation in Nerdio. If you manually create a VM via Azure portal, you can leave the checkbox disabled and continue:

All our AVD workers are cloud only and managed exclusively via Intune. For hybrid workers I have to execute a convoluted bunch of scripted actions to finally be able to manage them via Intune:
- Wait for Entra Connect Sync cycle to sync computer object to Entra
- Trigger hybrid join, wait for hybrid join to succeed
- Trigger intune enrollment, wait for enrollment to succeed
- Execute Azure Runbook to Join relevant Entra groups - because there is no inbox way to add a hybrid host to groups during deployment
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