Azure Active Directory as Domain Controller for Azure Virtual Machines
NO! Windows Azure Active Directory is NOT a Domain Controller. You can NOT join computers to Windows Azure AD. You can use it to sync on-premises AD with Windows Azure AD to easily enable Web SSO (Single Sign On). You can use to build enterprise grade web applications.
You can read more about Windows Azure Active Directory here.
Up until recently the answer was a flat no, but that has changed with Windows 10.
Windows 10 devices can join Azure Active Directory (AD) domains. But it is more about identify management than traditional Active Directory (AD) services. But you can use a combination of Azure AD and MDM (Mobile Device Management) to provide some of the services that used to be reserved for AD.
One thing to keep in mind is that Azure Active Directory (AD) is completely different than the similarly named Active Directory provided by a Windows Domain Controller. Azure AD is not a Domain Controller, but as of Windows 10 Azure AD, MDM and Intune can do some of the things that you previously could only be provided by AD. With Windows 10, Microsoft has greatly extended MDM and has made it possible to manage regular Windows 10 desktop and laptops with MDM.
The Active Directory Team Blog has more information. The post Azure Active Directory and Windows 10: Bringing the cloud to enterprise desktops! list some of the benefits that it brings including:
- Self-provisioning of corporate owned devices.
- Use existing organizational accounts.
- Automatic MDM enrollment.
- Single Sign-On to company resources in the cloud.
- Single Sign-on on-premises
- Enterprise-ready Windows store.
- Support for modern form factors. Azure AD Join will work on devices that don't have the traditional domain join capabilities.
- OS State Roaming.
This doesn't cover the traditional features provided by AD. Per the post Azure AD Join on Windows 10 devices Azure AD it targeted at the following three scenarios: Your apps and resources are largely in the cloud, Seasonal workers and Students, and Choose your own device for on-premises users. As you can see Azure AD is targeted more towards enabling BYOD (Bring Your Own Device). Azure AD enables management of devices, like tablets or non-Pro version of Windows, that don't have the capability to join a Domain.
From the same post:
Domain join gets you the best on-premises experiences on devices capable of domain joining, while Azure AD join is optimized for users that primarily access cloud resources. Azure AD Join is also great if you want to manage devices from the cloud with a MDM instead of with Group Policy and SCCM.
Azure now offers traditional Active Directory service called Azure Active Directory Domain Services. This offers domain join, NTLM and Kerboeros authentication. You can even manage machines using Group Policy.
This is possible using Azure Active Directory Domain Service (notice the difference from regular Azure Active Directory which does not have domain support)
https://azure.microsoft.com/en-us/services/active-directory-ds/