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Your Exchange Online mailbox includes a feature called Archive that allows you to quickly move a message to a predetermined folder. It is useful for users who generally file their mail into one location instead of spreading it out amongst multiple folders.

Archive Folder Creation

When you first click on the Archive button in Outlook 2016, Outlook 2016 for Mac, or Outlook Web App (OWA), you will be prompted to select a folder for use by this feature. By default, it will want to create a folder called Archive. You have the option to use an existing folder, as well.

Archive Retention

The Archive feature and its folder are not exempt from the Omnicom retention policy. The Archive folder, like other user-created folders in the root of the mailbox, is subject to a 540-day retention policy.

You can find additional information on retention in the Retention section.