Azure VNet peering is an option to connect different Azure VNets that work in the same Azure data center. Azure VNet peering lets you directly link two VNets in the same region via private IPs. Azure VNet peering routes packets between virtual networks through the internal Azure backbone network.  An Azure VPN gateway between these networks is not needed.

This allows you a low-latency, high-bandwidth connection between virtual machines in the virtual networks. Azure VNet peering works with VNets based on the Azure Resource Manager (ARM) and/or the classical Azure System Management (ASM).

Azure VNet peering also works across virtual networks in different subscriptions. So, you are able to connect, for example, subscriptions paid by different departments.