Input a username, which will be used to sign in and a display name.
If you have multiple domain names in your organization you can choose the domain in the drop-down next to username
Scrolling down, you can assign the user to roles or groups if you want to
There are other settings, such as blocking sign-in from locations if you want to set those
Once all of those are set, you can click create user and it will make the new user.
By default, Azure AD is going to create an unlicensed user, so if you want to assign a license to the user you can do that once the user is created
This can be done by clicking on the user in the lists of users, choosing licenses from the left, and then clicking assignments towards the top. The license can then be checked and services can be removed if you would like.