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Availability sets are used to inform the Azure fabric that two or more of your VMs are providing the same workload and thus should not be susceptible to the same fault or update domains. If you select an availability set during the creation of a VM in the portal, you can only deploy your VM to the VNet where the other VMs are deployed and the option to create a new VNet is removed.

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Cover of Exam Ref 70-533 Implementing Microsoft Azure Infrastructure Solutions

Note

Right. In an availability set topology VMs work in different Fault Domain with independent hardware, switches, electricity, etc.