After configuring "Enable Azure AD Joined Device Management" stale machine objects are not automatically removed from AAD.
- Made a custom aad role with the following permissions: microsoft.directory/devices/standard/read microsoft.directory/devices/delete
- Assigned this role to the spn we use for the connections
- Through powershell changed this from false to true to CustomProperties: xsi:type="StringProperty" Name="AzureAdDeviceManagement" Value="true"
However stale machine objects did not automatically get removed from AAD.
Product Design / Functionality Limitation by design.