How it works...

Network peering allows us to establish a connection between two Azure VNets in the same Azure tenant. Peering uses a Microsoft backbone network to route private traffic between resources on the same network, using private IP addresses only. There is no need for virtual network gateways (that create additional cost), as a virtual "remote gateway" is created to establish a connection. The downside of this approach is that the same VNet can't use peering and a virtual network gateway at the same time. If there is a need to connect VNet to both the local network and another VNet, we must use a different approach and use a virtual network gateway that will allow us to create a Site-2-Site connection with a local network and a VNet-2-VNet ...

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