Q. If I have two sites connected via ExpressRoute and each site is peered to another virtual network with transit routing, can those peered sites communicate?
A. Consider the architecture below.
Virtual networks connected to the same ExpressRoute circuit are automatically connected. When virtual networks are peered (possible within the same region) those networks can communicate via the Azure backbone and an option is to enable transit routing which then enables communication to that peered network via the MPLS. What happens when there are multiple peered networks using transit routing? The good news is the virtual networks can communicate providing full communication.