We have Dynamics 365 on-premises with the latest cumulative update (Update 1.26, March 2024, 9.1.26.23). When editing any lookup field, we only see the options to add new or change the view.
I borrowed the screenshot from an article describing this for the online version, so on the left side is what we see, and on the right side is what we want:
As the article shown, this feature is enabled in the Power Platform Admin Center.
And No documentation has been found to mention that this feature is supported in the on-premise version.
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