An Azure SQL family PaaS service with near-total compatibility with the SQL Server engine, including instance features such as SQL Agent, cross-database queries, Database Mail, or CLR. It is deployed inside a virtual network with a private IP.
In DP-900 it is the option for migrating SQL Server with minimal changes and without managing the operating system. It is compared with Azure SQL Database (PaaS for new apps) and SQL Server on Azure VMs (IaaS with OS access and 100% compatibility).
Azure SQL Managed Instance is a concept that can show up on the exam. Check the full guide to see it in context.