Each Azure VM has a OS disk (C drive) and a temporary disk (D drive). Only store on the temporary disk temp data that doesn’t need to be retained as all data on this disk will be lost after server reboot.
The best practice for SQL Server on Azure VM is to use Premium Disks pooled for increased IOPs and storage capacity. Data file should be on its own pool with read-caching on the Azure disk. Transaction log file should on its own pool without caching, as caching won’t benefit transaction log operation. TempDB can be on its own pool, or just using the VM’s temporary disk (D drive). VM’s temporary disk (D drive) is physically attached to the physical server the VM is running on so will have lower latency.
Azure managed disks provide 99.999% availability.