The Microsoft Azure Hybrid Benefit for SQL Server allows you to choose where you use a Microsoft SQL Server license: either on-premises or in Microsoft Azure. Not only that, you’re allowed to choose between a Microsoft Azure virtual machine (Infrastructure as a Service (IaaS)) or the Microsoft Azure SQL Database service (Platform as a Service) (PaaS)). This article describes the details of the two options: https://docs.microsoft.com/en-us/azure/sql-database/sql-database-paas-vs-sql-server-iaas. Customers are eligible for the Microsoft Azure Hybrid Benefit by having active Software Assurance on their licenses or buying a Server Subscription.