When you configure SharePoint Online integration for your D365 entities, while setting up, you see an option to either proceed to enable feature based on entity or not.

And you’re not sure what it means. Let’s quickly see that it stands for.

I assume you know that you’ll need to go to Settings > Document Management > Document Management Settings to enable SharePoint integration for selected entities.

Now, let’s look at the difference between them.

Folder Structure based on Entity

When you select based on Entity, you get 2 options – Account and Contact. There’s no more options.

Now, when the above is setup and when you put documents under an Opportunity, see below how the documents will be stored in SharePoint.

1. The Opportunity Printers has a parent Account called as ‘Adventure Works’.
   And you add Document to this Opportunity.
   
2. When I add documents under Opportunity Printers, on the SharePoint site, it will be like –
   

Folder Structure Not Based on Entity

Note: I’m doing this in another instance for demo purpose.

1. When you don’t select and proceed as is, and you go to the Opportunity Printers and add you Documents to the record as below.
   
2. You can see unlike the one based on Entity, these Documents have Opportunity at the root level and not the Account which is that Opportunities’ parent.
   

Hope that was straight forward!