Hi,
Example of where Update Domain (UD) is applicable: An update needs to be applied to the host operating system.
Example of where Fault Domain (FD) is applicable: Host hardware fails (e.g. power supply, memory, overheat, etc.).
In regards to Update Domains, in my opinion they may eventually be deprecated. They are already deprecated for VM Scale Sets in Flexible mode due to the fact most platform updates are performed using Live Migration.
If the above is useful please click Accept Answer.
Thanks.
-TP