Hi MB,
Resource Groups with Azure Local
Azure Local (like Azure Arc-enabled infrastructure such as Azure Stack HCI) uses standard Azure resource groups to manage all its components in Azure.
Cluster Resources when you set up your Azure Local system (e.g., an Azure Stack HCI cluster), you choose an Azure subscription and a resource group. This resource group will hold the Azure representation of your local cluster, the Arc Resource Bridge, and other essential services.
Deploy an Azure Local instance using the Azure portal: https://learn.microsoft.com/en-us/azure/azure-local/deploy/deploy-via-portal?view=azloc-2504
VMs and Resource Group Containment
VMs Reside in Resource Groups: Virtual Machines (VMs) that you create on your Azure Local setup and manage through Azure Arc are also Azure resources. As such, they must be placed in a resource group.
Containment: To put your VMs and their associated resources (like virtual disks and network interfaces) into the same resource group as your Azure Local cluster. This keeps everything tied to that specific local deployment neatly contained and easier to manage.
While technically possible to use a different resource group, using the same one is the standard advice for streamlined management.
For ease of management, we recommend that you use the same resource group as your Azure Local.
Create Azure Local virtual machines enabled by Azure Arc
Manage resources for Azure Local VMs enabled by Azure Arc
Important Note: You cannot move VMs on Azure Local (and their related resources like disks and network interfaces) to a different resource group after they've been created. Plan your resource group structure carefully.
Moving a resource group isn't supported for VMs on Azure Local and its associated resource
Sorting Your Resources you can sort and organize your Azure Local clusters, VMs, and other resources using standard Azure Resource Manager
Manage Azure resource groups by using the Azure portal:
Use tags to organize your Azure resources and management hirerarchy:
https://learn.microsoft.com/en-us/azure/azure-resource-manager/management/tag-resources
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Thank You.