Q. Is nesting supported in Azure IaaS VMs?
A. Certain Azure IaaS VMs support the passthrough of the hardware assisted virtualization features of the processor to the VM (a feature of Windows Server 2016 Hyper-V) such as the new v3 of the D and E series. When using these VMs you can enable the Hyper-V role within the VM and create other VMs. Microsoft has a quick start script to check for the right configuration and perform a quickstart Hyper-V installation within the VM. This can be downloaded from https://github.com/charlieding/Virtualization-Documentation/tree/live/hyperv-tools/Nested.
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