The Legacy Context
Custom workflow activities were the extensibility path for classic Dataverse workflows. Many are still in production. New work uses Power Automate + custom connectors instead.
Modern Alternative: Custom Connectors
For extending Power Automate with custom logic, build a custom connector backed by an Azure Function. Same outcome, easier to version and share across flows.
When CWAs Still Fit
Legacy workflow compatibility. Specific sync-transaction needs that Power Automate + connector can’t meet. Edge cases only.
Testing
Same pattern as plug-ins — FakeXrmEasy and integration tests. But CWAs are a shrinking tech; invest in modern alternatives.
Migration
Inventory CWAs. For each: is the flow it supports still relevant? If yes, rebuild in Power Automate. If no, retire.