A fault domain is a logical group of the underlying hardware that share a common power source and network switch, similar to a rack within an on-premise data-centers. As you create VMs within an availability set, the Azure platform automatically distributes your VMs across these fault domains. This approach limits the impact of potential physical hardware failures, network outages, or power interruptions.
An update domain is a logical group of the underlying hardware that can undergo maintenance or can be rebooted at the same time. As you create VMs within an availability set, the Azure platform automatically distributes your VMs across these update domains. This approach ensures that at least one instance of your application always remains running as the Azure platform undergoes periodic maintenance. The order of update domains being rebooted may not proceed sequentially during planned maintenance, but only one update domain is rebooted at a time.
