@Radek Hromadka Thanks for posting your query on Microsoft Q&A.
The B1s VM size has only 1 GiB of memory, which is not sufficient to run the Kubernetes system pods and your application pods. AKS requires nodes to use VM sizes with at least 2 vCPUs and 4 GiB of memory(RAM) to ensure that the required kube-system pods and your applications can be reliably scheduled. Therefore, you cannot use the B1s VM size for AKS clusters.
You need to select an instance with at least 4 GiB of memory as also shared in the error message.
Currently, the cheapest is Standard_B2s
with 4 GiB RAM. You can also sort it directly in the Azure portal.
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