Hi Rahul -

In general, the rule-of-thumb with Umbraco is that you can create a multi-tenant Umbraco environment when the sites that make up the tenants are related. Namely that they share the "building blocks" (DataTypes, DocTypes, Templates, CSS, Members, Users, etc...) and the traffic to the sites is expected to be moderate. This is because Umbraco does not provide a way (out of the box) to create separation between the building blocks that are used to create sites...so all elements will be available for all sites in your instance. When the sites do share the building blocks, creating multiple sites in a single instance makes perfect sense and can provide some efficiency. However, when the sites do not (or should not) share the building blocks, creating the sites (and the underlying building blocks) becomes quite tricky as you must rely on naming conventions or a custom solution to add separation.

That said, of course there are instances that contain multiple sites AND use a distinct set of building blocks just fine (and also sites with very high traffic). It comes down to planning your approach and diligence with regard to naming conventions (assuming that is the approach you take to add separation.)

Another consideration with regard to multiple sites in an instances, is that an Umbraco instance runs in a single process on the web server, so that if one site behaves badly and causes the process to run slowly/crash, all sites will be affected.

Azure is a great choice for hosting and you can use either an IaaS approach (i.e., set up VMs) or Azure WebApps which run Umbraco quite well. Make sure to follow the specific configuration guidance when running in WebApps:

https://our.umbraco.com/Documentation/Getting-Started/Setup/Server-Setup/azure-web-apps

You may also consider using Umbraco Cloud for your hosting...it runs on Azure natively :-) .

Hope that helps give you some context.

Best, -Paul