Hello 57803309,
Yes, your understanding is correct.
In Azure Stack HCI 23H2, when no reserved capacity is available, the recommended process for replacing a failed drive is as follows:
Add the replacement drive first.
Wait for the repair job to complete.
Then remove the failed drive.
For detailed guidance, refer to the official documentation: Replace failed drives on Azure Stack HCI or Windows Server
If you have any further questions, please let us know.