Hi @Arman Koradia,
Welcome to the Microsoft Q&A Platform! Thank you for asking your question here.
By using a Microsoft 365 Business Premium license, you can apply Windows 10/11 licenses with multi-tenant hosting rights. Choosing the "Bring Your Own License" (BYOL) option for your VM reduces costs by eliminating the Windows OS license fee, though the base compute cost remains.
The discount is applied automatically when you click on the BYOL checkbox and confirm that you have an eligible Windows license.
The discount applies only if the user with the Microsoft 365 Business Premium license logs into the VM using their Microsoft Entra ID credentials.
It is not possible to verify without internet connectivity, and you will be charged the full price for both the VM and the OS license.
Users can access Microsoft 365 Apps on the VM if they have the appropriate license- https://www.microsoft.com/en-us/microsoft-365/business/compare-all-microsoft-365-business-products#footnote3
Also, I would recommend you refer the link for more information-https://learn.microsoft.com/en-us/azure/virtual-machines/windows/windows-desktop-multitenant-hosting-deployment#operating-systems-and-licenses
If you have any further queries, do let us know.