A logical grouping of VMs within a single datacenter that spreads them across fault domains (separate racks/power) and update domains (so Azure does not restart them all at once). It protects against local hardware failures, not against the loss of an entire datacenter.
AZ-305 contrasts this with Availability Zones: Availability Sets protect within a single datacenter (99.95% SLA); Availability Zones spread VMs across physically separate datacenters in the region (99.99% SLA, stronger protection, but requires a region that supports them).
Availability Sets is a concept that can show up on the exam. Check the full guide to see it in context.