In this diagram, I have taken a screenshot of the running Azure VM which shows a disk associated with a VM that is not encrypted (ENCRYPTION not enabled). Having said that, it also states that the disk is encrypted at rest with Storage Service Encryption (SSE). For more information, you can refer to Azure documentation. Rest is the default data protection technique achieved by encrypting the service provider's full disk in order to protect data in case of physical theft or loss of the disk:
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