An Azure policy is applied that restricts where Azure SQL servers can be created. What is the effect of this policy?

Azure Policies define rules for resources to ensure compliance. If a policy restricts Azure SQL server creation to ContosoRG1, it means any attempt to create an Azure SQL server outside of ContosoRG1 within the policy's scope (e.g., Subscription 1) will be denied. This ensures governance and adherence to organizational standards. Therefore, you can only create Azure SQL servers in ContosoRG1. The policy doesn't prevent creation anywhere in the subscription, only where it's not allowed. It also doesn't specifically prevent creation only in ContosoRG1; rather, it allows creation there. It also doesn't allow creation in any resource group if the policy is restrictive.