Azure Virtual Network now supports reverse DNS lookup (PTR DNS queries) for virtual machine IP addresses by default. Use this to quickly look up name of the VM from its IP address.
Previously, using DNS queries to look up the fully qualified domain name (FQDN) for a virtual machine from its IP address would result in an NXDOMAIN response. Now, instead of getting an NXDOMAIN, you’ll receive valid FQDN of the virtual machine to which the IP address belongs.
Reverse DNS is supported in all ARM based virtual networks.
Reverse lookup of a VM is scoped in the vnet boundaries it belongs to and will result in NXDOMAIN response even between vnets that are peered.
There is a way to disable reverse lookup for a vnet by creating a reverse lookup zone using Azure DNS private zones and link this zone to your virtual network. You can check this guide on how to do this through the portal.
For a complete overview of name resolution in Azure Virtual Networks check this link here.