An Azure native disaster recovery service. Previously known as Microsoft Azure Hyper-V Recovery Manager.
Yep - the Region 2 VNet is isolated by default because it has no peerings, VPN gateways, or ExpressRoute connections linking it to other networks. However, because it shares the same address space as Region 1, you must ensure that it remains unattached to the on-premises VPN or production VNets.
During a Test Failover, ASR attempts to start the replicated VM with the same private IP address as the original VM, provided that the address belongs to the target subnet and is available. If the address is already in use or unavailable, ASR assigns another available private IP address, typically from the end of the subnet range.
The production VM in Region 1 will not be impacted. A Test Failover is a non-disruptive operation that does not shut down, stop, or modify the source VM, nor does it replicate test changes back to the source. Because the Region 2 test VNet has no routing or connectivity to Region 1 or the on-premises environment, both VMs can safely run simultaneously with overlapping private IP address spaces during the test.
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hth
Marcin