SQL Azure, also known as Windows Azure SQL Database, is a database management system (DBMS) based on SQL Server. It is part of the Windows Azure platform. When Enterprise Server for .NET runs in Azure in a Platform-as-a-Service (PaaS) configuration, it uses SQL Azure for its system databases.
From SQL Azure Database Overview at http://social.technet.microsoft.com/wiki/contents/articles/sql-azure-database-guide.aspx:
Microsoft SQL Azure Database is a database service provided as part of the Windows Azure Platform. It is based on Microsoft SQL Server, and provides many of the same features. Unlike SQL Server, which is provided as a software package that you install and maintain, SQL Azure Database is provided as a service that is hosted on hardware in Microsoft datacenters. SQL Azure takes care of maintaining the hardware and software layer, freeing you to concentrate on database design. Since SQL Azure maintains the hardware and software for your database, provisioning a new database is very straightforward and easy; you request a new database and Microsoft provisions one automatically for you. Data stored in SQL Azure Database is also highly available, as each database hosted in the Microsoft data center has three copies: one primary and two secondary replicas. All reads and writes go through the primary, and any changes are replicated to the secondary replicas asynchronously.
See Getting Started with Windows Azure SQL Database at http://www.windowsazure.com/en-us/manage/services/sql-databases/getting-started-w-sql-databases for details about how to set up and access SQL Azure databases. The documentation in this section assumes availability of a SQL Azure database server.