Starting with your second question the toggle you mention is an historical thing that in more recent tenants is not available so it is not plan related, it’s more due to being something that has been superseded. In addition, the lack of that toggle should not prevent you from leveraging SSO so I would not focus on that toggle not being available and instead would focus on the use case and the outcome you obtain independent of that toggle.
Now, in relation to the first question, it’s a bit more complex to say as machine to machine authentication imply authentication without the context of an end-user while SSO implies the existence of a user who performed a login. In conclusion, in general SSO would not be a replacement for machine to machine authentication.