Hi @Francois Botha Welcome to Microsoft Q&A, Thanks for posting your query.
In a single server for all versions the default collation was set to latin1_swedish_ci, this was set to make sure that all versions have the same default settings.
We have received feedback on this and in the flexible server offering we are setting the default collation to match the community edition.
For a single server, you can change it by changing the server parameter (collation_server) if you want to change it however as you mentioned you are aware of how to change.
For flexible server
8.0 --> utf8mb4_0900_ai_ci
5.7 --> latin1_swedish_ci
Please let me know if you need additional information