Currently Dynamics 365 is sychronised with Office 365 Active Directory for users, and users are displayed with their full name, taken from the first name and last name fields. However AD supports Display name which is useful in countries with long legal names but shorter day-to-day names (such as Spain).

There should be a synchornisation of Display names between AD and D365, and an option to use display names within the application, on forms, lists and reports.