Conditional access policies can block partner accounts and apps from accessing the customer tenant. If you have a restrictive conditional access policy on a customer tenant, you need to ensure you have excluded the service providers or the service principal.

You can read about Microsofts recommendations for CA policies and GDAP here:  GDAP frequently asked questions - Partner Center | Microsoft Learn 

Recommendations

Your Partner Tenant

• Have a conditional access policy that applies to the service account you are using for Sync 365.
• Enforce multi factor authentication
• DO NOT have any trusted locations (The Microsoft Partner Center will block connections where MFA has not been used)

Customer Tenants

Exclude service provider users from ALL conditional access policies

• Log into conditional access policies in the customer tenant
• For each policy add an exclusion to "Users and Groups"
  • Select: Guest or external users> Service provider users> Enter your partner tenant ID.