Hi hemanth kumar,
Fault and Upgrade domains are a concept of Azure Availability Sets and are documented here.
Update Domains (UDs) involve grouping machines that undergo updates simultaneously, making it crucial to distribute machines across UDs to prevent simultaneous updates. On the other hand, Fault Domains (FDs) involve grouping machines that share similar hardware, power, and network components. Distributing machines over FDs ensures they are on different sets of hardware, minimizing the impact of hardware failures.
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 regard 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.
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Thanks.
Amaran