See the Explanation below for step by step instructions
Explanation:
To ensure that hosts on VNET1 and VNET2 can communicate with minimal latency, you can use Virtual Network Peering. This method connects the two virtual networks directly through the Microsoft backbone network, ensuring low-latency and high-bandwidth communication.
Step-by-Step Solution
Step 1: Set Up Virtual Network Peering
Navigate to the Azure Portal.
Search for "Virtual networks" and select VNET1.
In the left-hand menu, select "Peerings" under the "Settings" section.
Click on "Add" to create a new peering.
Enter the following details:
Name: Enter a name for the peering (e.g., VNET1-to-VNET2).
Peer virtual network: Select VNET2.
Allow virtual network access: Ensure this is enabled.
Allow forwarded traffic: Enable if needed.
Allow gateway transit: Enable if needed.
Click on "Add".
Step 2: Configure Peering on VNET2
Navigate to VNET2 in the Azure Portal.
In the left-hand menu, select "Peerings" under the "Settings" section.
Click on "Add" to create a new peering.
Enter the following details:
Name: Enter a name for the peering (e.g., VNET2-to-VNET1).
Peer virtual network: Select VNET1.
Allow virtual network access: Ensure this is enabled.
Allow forwarded traffic: Enable if needed.
Allow gateway transit: Enable if needed.
Click on "Add".
Explanation:
Virtual Network Peering: This feature connects two virtual networks in the same or different regions, allowing resources in both networks to communicate with each other as if they were part of the same network. The traffic between peered virtual networks uses the Microsoft backbone infrastructure, ensuring low latency and high bandwidth12.
Allow Virtual Network Access: This setting ensures that the virtual networks can communicate with each other.
Allow Forwarded Traffic: This setting allows traffic forwarded from a network security appliance in the peered virtual network.
Allow Gateway Transit: This setting allows the peered virtual network to use the gateway in the local virtual network.
By following these steps, you can ensure that hosts on VNET1 and VNET2 can communicate with minimal latency, leveraging the high-speed Microsoft backbone network.

Explanation
Graphical user interface, text, application Description automatically generated

Box 2: One NSG
The minimum requirement is one NSG. You could attach the NSG to VMScaleSet1 and restrict outbound traffic, or you could attach the NSG to VMScaleSet2 and restrict inbound traffic. Either way you would need two custom NSG rules.
Box 1: Two custom rules
With the NSG attached to VMScaleSet2, you would need to create a custom rule blocking all traffic from VMScaleSet1. Then you would need to create another custom rule with a higher priority than the first rule that allows traffic on port 443.
The default rules in the NSG will allow all other traffic to VMScaleSet2.