A Microsoft Entra ID identity that Azure manages automatically so a resource (VM, App Service, Function) can authenticate to other services without storing credentials in code. There are two types: system-assigned (tied to the resource) and user-assigned (independent and reusable).
A central topic on AZ-305 for identity security design. Typical question: how does a Function App access Key Vault without storing secrets in configuration? Managed Identity + RBAC access on Key Vault. The system-assigned type is deleted along with the resource; the user-assigned type persists.
Managed Identity is a concept that can show up on the exam. Check the full guide to see it in context.