Explanation:
As per the official MS doc:
The recommended steps to onboard on Azure File Sync for the first with zero downtime while preserving full file fidelity and access control list (ACL) are as follows:
1. Deploy a Storage Sync Service. --> This needs to be done on Azure .
2. Create a sync group. --> This needs to be done on Azure
3. Install Azure File Sync agent on the server with the full data set. --> This needs to be done on server1.
4. Register that server and create a server endpoint on the share. --> This needs to be done on server1.
5. Let sync do the full upload to the Azure file share (cloud endpoint).
6. After the initial upload is complete, install Azure File Sync agent on each of the remaining servers.
7. Create new file shares on each of the remaining servers.
8. Create server endpoints on new file shares with cloud tiering policy, if desired. (This step requires additional storage to be available for the initial setup.)
9. Let Azure File Sync agent do a rapid restore of the full namespace without the actual data transfer. After the full namespace sync, sync engine will fill the local disk space based on the cloud tiering policy for the server endpoint.
10. Ensure sync completes and test your topology as desired.
11. Redirect users and applications to this new share.
12. You can optionally delete any duplicate shares on the servers.

First action: Create a Storage Sync Service
The deployment of Azure File Sync starts with placing a Storage Sync Service resource into a resource group of your selected subscription.

Second action: Create a sync group
A sync group defines the sync topology for a set of files. Endpoints within a sync group are kept in sync with each other. A sync group must contain one cloud endpoint, which represents an Azure file share and one or more server endpoints. A server endpoint represents a path on a registered server. A server can have server endpoints in multiple sync groups. You can create as many sync groups as you need to appropriately describe your desired sync topology.

Third action: Run Server Registration
Registering your Windows Server with a Storage Sync Service establishes a trust relationship between your server (or cluster) and the Storage Sync Service. A server can only be registered to one Storage Sync Service and can sync with other servers and Azure file shares associated with the same Storage Sync Service. ) Reference:
https://docs.microsoft.com/en-us/azure/storage/files/storage-sync-files-deployment-guide?tabs=azure-portal

Reference:
https://docs.microsoft.com/en-us/azure/virtual-network/virtual-network-peering-overview

Every Azure AD directory comes with an initial domain name in the form of domainname.onmicrosoft.com. The initial domain name cannot be changed or deleted, but you can add your corporate domain name to Azure AD as well. For example, your organization probably has other domain names used to do business and users who sign in using your corporate domain name. Adding custom domain names to Azure AD allows you to assign user names in the directory that are familiar to your users, such as '[email protected].' instead of 'alice@domain name.onmicrosoft.com'.
Scenario:
Network Infrastructure: Each office has a local data center that contains all the servers for that office. Each office has a dedicated connection to the Internet.
Humongous Insurance has a single-domain Active Directory forest named humongousinsurance.com
Planned Azure AD Infrastructure: The on-premises Active Directory domain will be synchronized to Azure AD.
References: https://docs.microsoft.com/en-us/azure/active-directory/fundamentals/add-custom-domain

DC1 : Not supported as it is Gen2 and OS disk size is greater than 300 GB
FS1 : Not supported as it is Gen2 and Linux VM. Linux Generation 2 VMs aren't supported.
CA1 : Not supported as bitlocker is enabled. BitLocker must be disabled before you enable replication for a VM.
SQL1: Supported
Reference:
https://docs.microsoft.com/en-us/azure/site-recovery/hyper-v-azure-support-matrix#azure-vm-requirements

References:
https://docs.microsoft.com/en-us/azure/storage/files/storage-sync-files-deployment-guide