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AZ-104: Day 10 — Azure Virtual Machines

Learning Hub Last Updated: Sep 16, 2026

Key Points, Definitions, Diagrams, Term Differences & Q&A

1. 25 Most Important Key Points

  • An Azure Virtual Machine (VM) is an Infrastructure-as-a-Service (IaaS) offering that provides on-demand, scalable compute with full control over the operating system.
  • A VM is built from three core components: Compute (vCPU + RAM), Storage (disks), and Networking (NIC + Virtual Network).
  • Every VM has an OS disk and a temporary disk by default, and can optionally attach one or more data disks for extra storage.
  • The OS disk holds the operating system and boot files, while the temporary disk (Dtemp) provides short-term local storage that is not guaranteed to persist across resizing or migration.
  • Managed Disks are the default, recommended disk option because Azure automatically creates and manages the underlying storage account for each disk.
  • Managed Disk performance tiers, from lowest to highest performance, are Standard HDD, Standard SSD, Premium SSD, and Ultra Disk.
  • VM Size (SKU) determines the number of vCPUs, amount of RAM, temp storage, and the maximum number of data disks and NICs a VM can support.
  • VM series are grouped by workload type: B-series (burstable, dev/test), D-series (general purpose), E-series (memory-optimized), F-series (compute-optimized), and more.
  • Stopping a VM from inside the guest OS still incurs compute charges because Azure hardware remains allocated to it.
  • Only Stopped (Deallocated) status releases the underlying compute allocation and stops compute billing — storage costs still apply.
  • Deallocating a VM can cause it to lose its dynamic Public IP address unless a Static IP or Standard SKU IP is configured.
  • Resizing a VM may require it to be deallocated first, and the new size must be supported by the hardware cluster hosting it.
  • Availability Sets protect against hardware failure within a single datacenter by spreading VMs across Fault Domains and Update Domains.
  • Availability Zones provide stronger resilience by spreading VMs across physically separate datacenters within the same Azure region.
  • Virtual Machine Scale Sets (VMSS) automatically add or remove identical VM instances to match demand, enabling horizontal scaling.
  • A Generalized VM image has had machine-specific information removed (via Sysprep) and is used as a reusable template for creating new VMs.
  • A Specialized VM image retains the original computer name, user accounts, and identity, and is used to directly restore or copy a specific VM.
  • Azure Compute Gallery (formerly Shared Image Gallery) lets organizations version, replicate, and share custom VM images across subscriptions and regions.
  • Azure Spot VMs offer deep discounts by using Azure's unused capacity, but can be evicted with little or no warning when that capacity is needed.
  • Azure Hybrid Benefit allows customers to apply existing on-premises Windows Server or SQL Server licenses to Azure VMs to reduce licensing cost.
  • Boot Diagnostics captures a screenshot and serial console log of the boot process, which helps troubleshoot a VM that fails to start correctly.
  • VM Extensions are small packages that run post-deployment configuration or automation tasks, such as the Custom Script Extension.
  • Proximity Placement Groups reduce network latency between VMs by physically co-locating them within the same datacenter.
  • Accelerated Networking improves throughput and reduces latency by bypassing the virtual switch, and is available on supported VM sizes.
  • Azure Bastion provides secure RDP/SSH access to VMs directly through the Azure portal without exposing a public IP, while Azure Backup and Azure Site Recovery protect VM data and enable disaster recovery.

Figure 2: Stopped vs. Stopped (Deallocated) — what's billed

2. 20 Definitions with Day-to-Day Examples

Azure Virtual Machine (VM)

Definition: An IaaS compute resource in Azure that runs an operating system and applications, giving the administrator full control similar to a physical server.

Day-to-Day Example: Like renting a fully equipped office space — you control what happens inside it, but the building (hardware) is managed by someone else.

OS Disk

Definition: The managed disk that holds the virtual machine's operating system and boot files.

Day-to-Day Example: Like the engine and chassis of a car — the core component the whole vehicle depends on to run.

Temporary Disk

Definition: Local, short-term storage attached to a VM that is not guaranteed to persist across resizing, migration, or maintenance events.

Day-to-Day Example: Like a whiteboard in a meeting room — useful for scratch notes during the session, but wiped clean afterward.

Data Disk

Definition: An additional managed disk attached to a VM to store application data separately from the OS.

Day-to-Day Example: Like an external hard drive plugged into a laptop for extra storage, kept independent of the laptop's own drive.

Managed Disk

Definition: A VM disk type where Azure automatically creates and manages the underlying storage account, simplifying scaling and reliability.

Day-to-Day Example: Like valet parking — you hand over the car and never worry about where exactly it is stored.

Premium SSD

Definition: A high-performance, low-latency managed disk tier backed by solid-state drives, intended for production workloads.

Day-to-Day Example: Like a sports car's tires — built for speed and responsiveness under heavier demand.

VM Size (SKU)

Definition: The specific hardware configuration (vCPU, RAM, temp storage, max disks/NICs) assigned to a virtual machine.

Day-to-Day Example: Like choosing a car trim level — the same model can come in economy, standard, or performance configurations.

Stopped (Deallocated)

Definition: A VM power state in which the compute allocation is released and compute billing stops, while disk storage is still billed.

Day-to-Day Example: Like returning a rental car to the lot — you stop paying for daily use, but the parking fee for your luggage left behind still applies.

Availability Set

Definition: A logical grouping that spreads VMs across separate Fault Domains and Update Domains within one datacenter to reduce downtime from hardware failure.

Day-to-Day Example: Like splitting a company's servers across different racks in the same building so one rack failure doesn't take everything down.

Availability Zone

Definition: A physically separate datacenter with independent power, cooling, and networking, within the same Azure region.

Day-to-Day Example: Like a company having backup offices in different buildings across the same city, so one building's outage doesn't stop the whole business.

Virtual Machine Scale Set (VMSS)

Definition: A group of identical, load-balanced VMs that can automatically increase or decrease in number based on demand or a defined schedule.

Day-to-Day Example: Like a restaurant calling in extra staff during a dinner rush and sending them home once things quiet down.

Generalized Image

Definition: A VM image that has been stripped of machine-specific identity information (via Sysprep) so it can be used as a reusable template.

Day-to-Day Example: Like a blank form template — no personal details filled in yet, ready to be copied and reused many times.

Specialized Image

Definition: A VM image that retains the original VM's computer name, user accounts, and configuration, used to recreate that exact machine.

Day-to-Day Example: Like photocopying a filled-out form exactly as it is, keeping every detail already written on it.

Azure Compute Gallery

Definition: A service for storing, versioning, and sharing custom VM images across subscriptions, regions, and tenants at scale.

Day-to-Day Example: Like a company's central catalog of approved equipment models, available to every branch office that needs to order one.

Azure Spot VM

Definition: A VM purchasing option that uses Azure's spare capacity at a steep discount, with the risk of eviction when that capacity is reclaimed.

Day-to-Day Example: Like buying a standby airline ticket — much cheaper, but you might get bumped if a full-fare passenger needs the seat.

Azure Hybrid Benefit

Definition: A licensing benefit that lets customers apply existing on-premises Windows Server or SQL Server licenses toward Azure VM costs.

Day-to-Day Example: Like transferring a gym membership you already paid for to a new branch instead of buying a second one.

Boot Diagnostics

Definition: A VM feature that captures a screenshot and serial log of the boot process to help diagnose startup failures.

Day-to-Day Example: Like a dashcam recording a car's ignition sequence, so a mechanic can see exactly what happened if it won't start.

VM Extension

Definition: A small software package deployed onto a VM after creation to perform configuration, monitoring, or automation tasks.

Day-to-Day Example: Like an app you install on a new phone after setup, adding a specific feature it didn't come with out of the box.

Proximity Placement Group

Definition: A grouping construct that ensures Azure places VMs as physically close together as possible to minimize network latency.

Day-to-Day Example: Like seating an entire project team at the same table so they don't waste time walking across the building to talk.

Azure Bastion

Definition: A fully managed service that provides secure RDP/SSH connectivity to VMs through the Azure portal, without exposing a public IP address.

Day-to-Day Example: Like a hotel's front desk that lets a verified guest into their room without ever handing out a key that works on the street door.

Figure 3: Azure Managed Disk Tiers — Cheat Sheet

Figure 4: Availability Set vs. Availability Zone vs. VM Scale Set

3. Differences Between Key Technical Terms (10)

1. Stopped vs. Stopped (Deallocated)

FeatureStopped (via OS shutdown)Stopped (Deallocated)
Compute billingStill chargedNot charged
Hardware allocationReserved for the VMReleased back to Azure
Dynamic Public IPRetainedMay be released

2. Availability Set vs. Availability Zone

FeatureAvailability SetAvailability Zone
Scope of protectionWithin one datacenterAcross separate datacenters
MechanismFault Domains & Update DomainsPhysically isolated zones in a region
Common confusionMistaken as protecting against a full datacenter outageIt protects at a broader, datacenter-level scope

3. Managed Disk vs. Unmanaged Disk

FeatureManaged DiskUnmanaged Disk
Storage account handlingFully managed by AzureCustomer manages the storage account
Scaling riskNo IOPS throttling limits from a shared accountRisk of hitting storage account IOPS limits
Recommended useDefault choice for virtually all VMsLegacy scenarios only

4. Standard SSD vs. Premium SSD

FeatureStandard SSDPremium SSD
PerformanceModerate, consistent latencyHigh IOPS, low latency
Best suited forWeb servers, dev/test workloadsProduction databases and I/O-heavy apps
CostLowerHigher

5. Generalized Image vs. Specialized Image

FeatureGeneralized ImageSpecialized Image
Identity informationRemoved via SysprepRetained from the source VM
Typical useTemplate for creating many new VMsRecreating or restoring one specific VM
Common confusionAssumed to keep the original computer nameIt is generalized images that strip that identity

6. Availability Set vs. Virtual Machine Scale Set

FeatureAvailability SetVM Scale Set
PurposeSpreads fixed VMs for fault toleranceAutomatically scales VM instance count
Instance countFixed, manually managedElastic — grows/shrinks with demand
Example useA pair of domain controllersA web tier handling variable traffic

7. Pay-As-You-Go VM vs. Azure Spot VM

FeaturePay-As-You-Go VMAzure Spot VM
PriceStandard on-demand rateDeeply discounted
Eviction riskNoneCan be evicted with little notice
Best suited forProduction, always-on workloadsBatch jobs, dev/test, interruptible tasks

8. OS Disk vs. Temporary Disk vs. Data Disk

Disk TypeBest Suited For
OS DiskHosting the operating system and boot files
Temporary DiskShort-term scratch/page-file data that can be lost
Data DiskPersistent application and business data

9. Public IP + RDP/SSH vs. Azure Bastion

FeaturePublic IP + Direct RDP/SSHAzure Bastion
Public IP exposureRequired on the VMNot required on the VM
Attack surfaceHigher — port open to the internetLower — access brokered through the portal
Access pathDirect client-to-VM connectionBrowser-based session via Azure portal

10. Managed Disk Tiers Compared

TierPerformance LevelTypical Use
Standard HDDLowestBackup, infrequently accessed data
Standard SSDBalancedWeb servers, dev/test
Premium SSDHighProduction workloads
Ultra DiskHighestSAP HANA and top-tier databases

4. Theoretical Questions (15)

Q1. What is an Azure Virtual Machine, and what three components make it up?

Answer: An Azure Virtual Machine is an IaaS compute resource offering full OS control; it is made up of Compute (vCPU + RAM), Storage (disks), and Networking (NIC + Virtual Network).

Q2. What is the difference between the OS Disk and the Temporary Disk?

Answer: The OS Disk stores the operating system and boot files and persists durably, while the Temporary Disk provides short-term local storage that is not guaranteed to survive resizing or migration.

Q3. Why are Managed Disks recommended over Unmanaged Disks?

Answer: Managed Disks let Azure handle the underlying storage account automatically, removing the risk of hitting shared storage account IOPS limits and simplifying scaling and reliability.

Q4. What factors does the VM Size (SKU) determine?

Answer: VM Size determines the number of vCPUs, the amount of RAM, temporary storage capacity, and the maximum number of data disks and network interfaces the VM can support.

Q5. What is the difference between Stopping and Deallocating a VM?

Answer: Stopping a VM from the guest OS still reserves the underlying hardware and continues compute billing, while Deallocating releases that hardware allocation and stops compute charges.

Q6. What is an Availability Set, and what does it protect against?

Answer: An Availability Set spreads VMs across Fault Domains and Update Domains within a single datacenter, protecting against hardware failure and planned maintenance within that datacenter.

Q7. What is an Availability Zone, and how does its scope differ from an Availability Set?

Answer: An Availability Zone is a physically separate datacenter within the same region; unlike an Availability Set, it protects against a full datacenter-level outage, not just a single rack or host failure.

Q8. What is a Virtual Machine Scale Set used for?

Answer: A VM Scale Set automatically adds or removes identical VM instances to match demand, enabling horizontal scaling for workloads with variable traffic.

Q9. What is the difference between a Generalized and a Specialized VM image?

Answer: A Generalized image has had machine-specific identity removed via Sysprep and is used as a reusable template, while a Specialized image retains the original VM's identity and is used to recreate that exact machine.

Q10. What is Azure Compute Gallery used for?

Answer: Azure Compute Gallery is used to store, version, and share custom VM images across subscriptions, regions, and tenants at scale.

Q11. What is an Azure Spot VM, and what is the trade-off?

Answer: An Azure Spot VM uses Azure's spare capacity at a steep discount; the trade-off is that it can be evicted with little or no notice when Azure needs that capacity back.

Q12. What is Azure Hybrid Benefit, and how does it reduce cost?

Answer: Azure Hybrid Benefit lets customers apply existing on-premises Windows Server or SQL Server licenses to Azure VMs, reducing or eliminating the licensing portion of the VM cost.

Q13. What does Boot Diagnostics help troubleshoot?

Answer: Boot Diagnostics captures a screenshot and serial console log of the boot process, helping administrators diagnose a VM that fails to start or hangs during boot.

Q14. What is a VM Extension, and give an example.

Answer: A VM Extension is a small software package deployed after VM creation to perform configuration or automation; the Custom Script Extension, which runs a script on the VM, is a common example.

Q15. What is the purpose of Azure Bastion?

Answer: Azure Bastion provides secure RDP/SSH access to VMs directly through the Azure portal, removing the need to expose a public IP or open management ports to the internet.

5. Scenario-Based Questions (8)

Q1. A company needs to guarantee that compute billing stops completely while a VM is not in use. What should they do?

Answer: They should shut the VM down through the Azure portal/CLI so it reaches the Stopped (Deallocated) state, rather than only shutting down the guest OS, which still reserves hardware and continues billing.

Q2. A company wants to protect a two-tier application's VMs from a single rack or host hardware failure within one datacenter. What should they configure?

Answer: They should place the VMs in an Availability Set, which spreads them across separate Fault Domains and Update Domains within that datacenter.

Q3. A company wants resiliency against an entire datacenter failure within the same region. What should they use?

Answer: They should deploy their VMs across Availability Zones, which places them in physically separate datacenters within the same region.

Q4. An e-commerce site needs to automatically add or remove VM instances based on changing traffic levels. What should be deployed?

Answer: They should deploy a Virtual Machine Scale Set (VMSS), which automatically scales the number of identical VM instances up or down based on demand.

Q5. An administrator wants to create a reusable template VM image with no leftover identity information for mass deployment. What type of image should they create, and what must be done first?

Answer: They should create a Generalized image; the source VM must first be prepared with Sysprep to remove machine-specific identity information before capturing the image.

Q6. A finance team wants to run large batch-processing jobs at the lowest possible cost and can tolerate the job being interrupted. What VM purchasing option fits?

Answer: They should use Azure Spot VMs, which offer significant discounts on unused Azure capacity in exchange for the risk of eviction.

Q7. A company already owns Windows Server licenses on-premises and wants to reduce the licensing cost of its Azure VMs. What should they use?

Answer: They should apply Azure Hybrid Benefit, which lets them use their existing on-premises Windows Server licenses to lower Azure VM licensing costs.

Q8. A security team wants to eliminate public IP exposure on a VM's RDP port while still allowing occasional remote access from the Azure portal. What should they implement?

Answer: They should implement Azure Bastion, which provides secure, browser-based RDP/SSH access through the Azure portal without requiring a public IP on the VM.