What are Limited Access permissions?
One of the biggest areas of confusion when using SharePoint Online is around Limited Access permissions. When you go to the Permissions page, you may see a message saying "There are limited access users on this site" or you may find a Limited Access Users group on your site.
Explanation
Limited Access comes into play when permission inheritance is broken.
This level is automatically assigned by SharePoint when you provide access to one specific item (folder, doc). You cannot assign Limited Access permissions directly to a user or group yourself. Instead, when you assign edit, or open permissions to the single item, SharePoint automatically assigns Limited Access to other required locations, such as the site or library in which the single item is located.
To put this in plain English, when you share an item with a user, they are given limited access to the site in order to give them access to the item. It’s essentially a pass-through permission. If you unshare the item or re-inherit permissions, the user will continue to have limited access to the site (and you will see the message), however, they will not have access to any items not shared with them.
This will happen even if they are already members of other groups with full permissions on the site.
Limited Access alone is harmless, however it can be confusing when doing permissions reviews. In SharePoint Online you can cleanup Limited Access system users once sharing is ended. Only site administrators can perform this. From the site permissions page, in the yellow banner you should see a message saying there are limited access users on this site.
Select 'Show Users'
You may see individual users listed, in which case you can select and remove them, or you may see a Limited Access System Group.
Click on the group name to see who is in there. Remove the user as needed.