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Azure Arc-enabled servers is designed to help you connect servers running on-premises or in other clouds to Azure.
Normally, you wouldn't connect an Azure virtual machine to Azure Arc because all the same capabilities are natively available for these VMs.
Azure VMs already have a representation in Azure Resource Manager, VM extensions, managed identities, and Azure Policy.
If you attempt to install Azure Arc-enabled servers on an Azure VM, you'll receive an error message stating that it is unsupported.
While you cannot install Azure Arc-enabled servers on an Azure VM for production scenarios, it's possible to configure Azure Arc-enabled servers to run on an Azure VM for evaluation and testing purposes only.
Please refer this link for more detail information.
azure-arc on-azure-virtual-machine
Hope this helps you.
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