Our setup consists of on-premises CRM 2016 in IFD configuration with ADFS. We have several custom web apps that are embedded in iframes in CRM as well. Our web apps are MVC running in IIS on .NET 4.7 and use the WS-Federation IIS module for authentication. This provides a pretty seemless experience where the embedded application does the redirect to and from ADFS to authenticate the user after they're already logged into CRM.
Our applications also call APIs we have created, which in turn make calls to Dynamics CRM web API using OData. Our APIs are setup to make calls to the CRM web API as a specific user chosen at deployment (it's a bit ugly, but it works). This causes issues associating created entities with the actual user, as CRM considers them created by the user in the API deployment. We need to fix that so that the user authentication is passed from our web application to our API and then to the CRM OData API.
From searching this site and other resources, I have determined this is not possible with WS-Federation and I would need to use OIDC. But, all the documentation that I have found about using OIDC in this manner has involve using Azure Active Directory and Dynamics 365, which does not apply in my scenario. I haven't found any information for the configuration of a local CRM 2016 instance or ADFS.
How is this accomplished for an all on-premises deployment?
To impersonate a user, set the CallerId property on an instance of OrganizationServiceProxy before calling the service’s Web methods.
Or
To impersonate a user based on their systemuserid you can leverage MSCRMCallerID with the corresponding guid value.
Although I can't guarantee that it will work in version 8.1 and below.