Hi Marouf Ali,
Welcome to the Microsoft Q&A Platform! Thank you for asking your question here.
Here is the detailed information about your query.
You are partially correct regarding VM and VM Instance. VM instances are templates or blueprints of a VM, that can be spun or downsized as needed but VM instances still require an operating system (OS), CPU, memory, storage, and other resources just like traditional virtual machines (VMs). The main distinction isn’t that they lack these resources but rather how they’re created and deployed.
Please refer to below document for more information https://learn.microsoft.com/en-us/azure/virtual-machines/overview
Yes, Availability Sets in Azure are specifically designed to enhance the availability and reliability of virtual machines (VMs), including VM instances. When you deploy virtual machines (VMs) within an Availability Set in Azure, the platform distributes them across various physical servers, network switches, and power supplies within a data center. This setup ensures that a failure in one physical component, such as a server or power source, will not impact all VMs within the set, enhancing your application's reliability and uptime. The ability to deploy VMs swiftly across multiple servers is a core benefit of cloud infrastructure. Azure takes care of the distribution process, placing each VM across different servers and network components to bolster fault tolerance and service continuity.
Although deploying VMs across multiple servers might seem time-intensive, Azure’s infrastructure is optimized for rapid provisioning, often enabling VM deployment within minutes, which allows for swift scaling as demand fluctuates. Billing is based on the number of VMs running, regardless of deployment speed, so costs depend on the quantity of active instances rather than the time it takes to deploy them.
Please refer to this for detailed information on Availability sets https://learn.microsoft.com/en-us/azure/virtual-machines/availability-set-overview
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