Thank you for reaching out here.Based on your question above
Are there any specific configurations required for Traffic Manager to properly handle active/passive failover with internal servers (private IP only) on Azure? Are there particular prerequisites regarding private DNS, firewall rules, or probe configurations?
This scenario is not supported by Traffic manager currently, the endpoint added should be publicly resolvable.
This limitation is currently documented here.
Traffic Manager endpoint can be any internet facing service hosted inside or outside of Azure. Hence, Traffic Manager can route traffic that originates from the public internet to a set of endpoints that are also internet facing. If you have endpoints that are inside a private network or have users making DNS requests from such internal networks, then you can't use Traffic Manager to route this traffic.
Even adding Private IP address as endpoint is not supported, this is documented here.
Based on your requirement you can explore Azure Application Gateway in this case.
These application gateway features can be helpful.
- https://learn.microsoft.com/en-us/azure/application-gateway/private-link
- https://learn.microsoft.com/en-us/azure/application-gateway/application-gateway-private-deployment?tabs=portal (Currently in preview.)
Please let me know if you have any additional questions. Thank you!