Different VNets provides an isolated environment for Web Servers, Application Servers, and Databases, Enhancing Security. Virtual network Peering is setup later on requirement basis only and not for all Vnets. Initially if Vnet1 for Web Server , Vnet2 for Middleware Server, Vnet3 for Database Server is created and we setup Virtual Network Peering between Vnet1Vnet2 and Vnet2Vnet3. Only Middleware Server(Vnet2) can communicate with Database Server(Vnet3) and Web Server(Vnet1) cannot communicate with Database Server(Vnet3).