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Local account vs. Microsoft account
Starting with Windows 8, Microsoft has tried to push users to sign in to Windows with a Microsoft account. Some features of Windows 8 and Windows 10 require access to the Microsoft cloud, and you therefore have to authenticate with a Microsoft account. Most notable is Microsoft’s cloud storage OneDrive, which can only be used on a Windows machine if you signed in with a Microsoft account. You also need a Microsoft account if you want to install Windows Store apps.
Windows 10 syncs various settings with the cloud, such as installed apps, Start screen and appearance configurations, Internet Explorer settings (favorites, history, etc.), and a few other configurations. For a complete list, just type “sync” in the Start menu or Start screen. You can also access the sync settings in the PC settings (OneDrive > Sync settings), which you can directly access through the Start menu. The configuration menu allows you to decide what information Windows 10 syncs with the cloud.
Windows 10 sync settings
If you sign in to another Windows 8 or Windows 10 machine, these settings can be synced, which ensures that you have your work environment from your previous machine without the need to configure everything again. Another advantage of using a Microsoft account is that you can restore your password online in case you forget it.
A downside of this Windows feature is that, whenever you log on to your Windows computer, you also sign in to Microsoft’s cloud. This means that Redmond knows when you sign in, and from where. Not everyone feels comfortable with this.
Another reason to use a local account instead of a Microsoft account is that, when you just want to test Windows 10, you might not want to sync data and settings with your Windows 8 and Windows 8.1 computers. The Windows 10 Technical Preview might contain bugs, and syncing configurations with previous Windows versions could cause problems. Or perhaps you are only interested in testing Windows 10 in a corporate Windows domain and you don’t need any cloud features anyway.
Install Windows 10 with a local account
During the Windows 10 installation, you will be asked to sign in to your Microsoft account.
Sign in to your Microsoft account
If you don’t have a Microsoft account, you also have the option to create an account.
Create a Microsoft account
No option is available that would allow you to proceed without a Microsoft account. Wolfgang mentioned in a comment below that an easier way exists than the method I described below. I totally missed the link "Sign in without a Microsoft account" (see screenshot above).
Just in case, Microsoft decides to remove the link again in a later Windows 10 version, you can use the trick below to install Windows with a local account instead of a Microsoft account. You simply have to try to sign in with a fantasy email address.
Use a fantasy email address
After you click Next, Windows 10 setup will come to the conclusion that you are having trouble signing in and that creating a local account might perhaps solve your problem.
Create a local account
After clicking Create a local account, setup will display a new form.
Local account setup
Another option that will lead to the same dialog is to simply disconnect your computer from the Internet when you install Windows 10.
If you change your mind later, you can connect your local account to a Microsoft account in PC Settings > Users and accounts.
Connect to a Microsoft account
Do you prefer signing in with a local account or with a Microsoft account on computers that are not part of a Windows domain?