Hello,
Thank you for posting in Q&A forum.
I went through your query carefully and understand it clearly.
It's a network connectivity build issue between nested Hyper-V machine and Azure VM.
To achieve this purpose, obviously we need to configure a correct route from nested VM to AzureVM2 therefore we will need to configure DHCP and RRAS role on AzureVM1 to build the route.
In this way we can even build connection from nested VM to another Azure VM hosted in different subnet.
Here's the link for reference regarding network connection build from nested VM to Azure VM hosted in another subnet, and I believe it will help in your case:
The only change you need to take is Don't create new Configure User-Defined Routes on Azure Portal, as your machines are in same subnet.