Azure Host Dedicated:
Microsoft Azure Dedicated Host allows customers to run their virtual machines on a dedicated host not shared with other customers. While in a regular virtual machine scenario different customers or tenants share the same hosts, with Dedicated Host, a customer does no longer share the hardware. The picture below illustrates the setup.
With a Azure Dedicated Host, Microsoft wants to address customer concerns regarding compliance, security, and regulations, which could come up when running on a shared physical server. In the past, there was only one option to get a dedicated host in Azure. The option was to use very large instances like a D64s v3 VM size. These instances were so large that they consumed one host, and the placement of other VMs was not possible.
To be honest here, with the improvements in machine placement, larger hosts, and with that a much better density, there was no longer a 100% guaranty that the host is still dedicated. Another thing regarding instances is they are extremely expensive, as you can see in the screenshot from the Azure Price Calculator.
Azure VM Isolation:
One of the primary benefits of cloud computing is concept of a shared, common infrastructure across numerous customers simultaneously, leading to economies of scale. This concept is called multi-tenancy. Microsoft works continuously to ensure that the multi-tenant architecture of Microsoft Cloud Azure supports security, confidentiality, privacy, integrity, and availability standards.
In the cloud-enabled workplace, a tenant can be defined as a client or organization that owns and manages a specific instance of that cloud service. With the identity platform provided by Microsoft Azure, a tenant is simply a dedicated instance of Azure Active Directory (Azure AD) that your organization receives and owns when it signs up for a Microsoft cloud service.
Each Azure AD directory is distinct and separate from other Azure AD directories. Just like a corporate office building is a secure asset specific to only your organization, an Azure AD directory was also designed to be a secure asset for use by only your organization. The Azure AD architecture isolates customer data and identity information from co-mingling. This means that users and administrators of one Azure AD directory cannot accidentally or maliciously access data in another directory.