What are key differences with IaaS v2 enabled through Azure Resource Manager?

The DIP is routable only within the cloud service and the address pool usually comes from RFC 1918 and 100. ranges, with the administrator having no control over the IP scheme used.

An Azure DNS is used which allows name resolution between the VMs in the same cloud service.

The Cloud Service has Virtual IP (VIP) which is an Internet routable IP address. Through this VIP endpoints are created which point to specific ports on VMs within the cloud service.

The Cloud Service also has a DNS name and provides load-balancing and auto-scale services for the VMs in the cloud service.

It removes the use of the Cloud Service (PaaS still uses Cloud Services). Instead all VMs must now be part of a Virtual Network and live within a Resource Group, which can also contain other types of resource such as storage.

Because there is no cloud service, the functions of the cloud service move to other constructs. VMs can have their own Internet routable IP address that is not shared using an instance-level public IP address (PIP) giving a VM direct Internet connectivity (note PIPs can also be used with IaaS v1).

Create a Resource Group (which can contain resources from all over the world).

Create or ensure there is an existing ARM (v2) storage account and virtual network to be used by the new VM. You cannot use non-ARM virtual networks or storage accounts with an ARM based VM.

Create a network adapter object which must be placed in a virtual network (the virtual network does not have to be in the same resource group as the VMs).

Create a VM and attach the network adapter object to it.

Add either a PIP to the network adapter or create a load balancer and assign a VIP then create NAT rules to enable Internet access to the VM services. Typically if you have a single VM needing to offer services you can assign a PIP but for larger scale use a network load balancer with NAT rules.