In the section "Business Entity Connectors", new connections can be created to Dynamics 365 instances. To do this, click the "Add" button and give the business entity connector an appropriate name.
The reference is used for API integrations and import/exporting in the business entity model, the default value can be used without issue. Then enter the url to the Dynamics instance. Note that after a definition is created the "Connect" button must be clicked in order to create or update the connection.