There has been considerable confusion on whether an "application user" needs a license or not. In June 2018, Microsoft has clarified that Application Users do not count towards the limits and do not use up licenses:
All application users are created with a non-interactive user account, however they are not counted towards the five non-interactive user accounts limit. In addition, there is no limit on how many application users you can create in an instance.
https://docs.microsoft.com/en-us/dynamics365/customer-engagement/admin/create-users-assign-online-security-roles#create-an-application-user
https://github.com/MicrosoftDocs/dynamics-365-customer-engagement/commit/9068938aa7ca91f12b8744518bf5071ec4514530#diff-184905bb3786c535b8e1eedb5ba54cf2R258
And for the steps to create the Application user, see: https://blog.aggregatedintelligence.com/2017/02/headless-authentication-against-crm-365.html
All application users are created with a non-interactive user account, however they are not counted towards the five non-interactive user accounts limit. In addition, there is no limit on how many application users you can create in an instance.
https://docs.microsoft.com/en-us/dynamics365/customer-engagement/admin/create-users-assign-online-security-roles#create-an-application-user
https://github.com/MicrosoftDocs/dynamics-365-customer-engagement/commit/9068938aa7ca91f12b8744518bf5071ec4514530#diff-184905bb3786c535b8e1eedb5ba54cf2R258
And for the steps to create the Application user, see: https://blog.aggregatedintelligence.com/2017/02/headless-authentication-against-crm-365.html
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