Horizon Cloud Service version 2 aka HCS-v2 gives you a direct option to integrate Dynamic Environment Manager directly via HCS-v2 Console. But once I started with that I was not sure how it is going to function based on the way it is configured on the console. Let’s go and check how it works.
Once we login to HCS universal console, there is option to configure VMware Dynamic Environment Manager under Settings.

Click on Manage to add DEM configuration path. you can add multiple DEM configurations.

Provide DEM configuration path and save.

You see that config has been added. As you can notice here that you can add multiple DEM config paths here, this is because you can manage multiple Pool templates under a same pool from same console and different pool templates can be assigned different local DEM shares.

You simply need to select the DEM config name and this will be supplied to VDM agent inside the VDI. (Snippet from Pool template.)

Once you have configured this, DEM will be configured in no-AD mode and tries to search for noAD.xml file in the provided location. so ensure you have correctly configured noAD.xml in the required location.
That being said, you can still configure DEM using AD-GPO directly as well but this is better as you are offloading the dependency on AD-GPO for VDI.
Hope this clarifies.