In fact this was an easy thing to do. Follow these steps:
- Go to Azure Portal -> Azure Active Directory -> Users -> Deleted users
- Select the deleted user and then click Restore User:
Furthermore if you want to find out who deleted the user, check Audit logs section in the same pane.
Deleted users are retained for 30 days and then they are permanently deleted. After these 30 days have passed neither you or Microsoft support can restore the user.
To my knowing there is no way to change the 30 day period.