You need to have an availability set already defined before creating VMs in Azure.
So what does an availability set do?
- An availability set is a group of virtual machines that are deployed across fault domains and update domains.
- Availability sets make sure that your application is not affected by single points of failure, like the network switch or the power unit of a rack of servers.
Fault Domain:
Each VM in Azure is assigned to a fault domain – Fault domains define the group of virtual machines that share a common power source and network switch.

Update Domain:
- Virtual machines get update domains automatically once they are put inside availability set.
- All virtual machines within that update domain will reboot together.
- Update domains are used for patching of the virtual machines.
- Only one update domain would be updated at the time.

- In Azure Resource Manager(ARM) portal, we have up to three Fault domains and 5 update domains but we can have up to 20 update domains.
- How many Fault Domains and How many Update Domains is recommended? it depends !
- If your region allows 3 fault domains, it is recommended to use 3, otherwise use 2 that is available to all regions.
- 5 update domains is recommended. But if you choose to have more update domain, it will take longer to get all the update applied to your system.
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