Azure Policy Scope Hierarchy and Inheritance

When a policy or initiative is assigned to a scope, it begins enforcing rules for all resources within that scope. Administrators can set parameters when assigning policies to customize how they apply without changing the policy definition itself. For instance, a policy that requires tagging could have a parameter specifying which tag name is required. Scopes work in a hierarchy: management groups contain subscriptions, subscriptions contain resource groups, and resource groups contain resources. Policies assigned at a higher scope apply to everything beneath it, though lower assignments can create exceptions for specific needs.