Can Azure SQL Database be hosted inside a VNet instead of just whitelisting it?

Azure SQL Database cannot be hosted directly inside a Virtual Network (VNet) as a fully isolated service. Instead, it operates on Azure's shared infrastructure, and you can control access to it by whitelisting specific IP addresses or using Virtual Network Service Endpoints.

If you require a database that is hosted within a VNet, Azure SQL Managed Instance is the appropriate option. Managed Instances can be deployed within a VNet, allowing for more isolation and control over the network environment compared to Azure SQL Database.

In summary, while you can connect Azure SQL Database to a VNet using firewall rules, it is not hosted inside the VNet itself. For hosting within a VNet, Azure SQL Managed Instance is the suitable choice.

Azure SQL DB cannot be deployed directly inside a vnet.  You can actually integrate using private endpoint or service endpoints + vnet rules +firewalls.

Azure SQL MI is the option to host anything on a VNet