An Azure SQL Database Managed Instance (preview) must be deployed within an Azure [virtual network (VNet)](../virtual-network/virtual-networks-overview.md). There are a few scenarios (i.e. linked servers to other SQL instances in your cloud or hybrid environment) that require private host names to be resolved from the Managed Instance. In this case, you need to configure a custom DNS inside Azure. Since Managed Instance uses the same DNS for its inner workings, the virtual network DNS configuration needs to be compatible with Managed Instance.
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