Hello there,
Azure AD DS includes built-in GPOs for the AADDC Users and AADDC Computers containers. You can customize these built-in GPOs to configure Group Policy as needed for your environment.
More information here https://learn.microsoft.com/en-us/azure/active-directory-domain-services/manage-group-policy
Azure VM that is domain joined to an On-Prem Active Directory domain would be able to pull GPOs from the On-Prem Active Directory Domain Controllers. Group Policies would get applied on this just like a normal server in the On-Prem AD Domain.
We need to make sure that the Azure VM should be able to speak to a DC without any network issues and that would get the Group Policy objects flowing from the DC to the Azure VM.
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