diff --git a/api/v1beta1/azurecluster_default.go b/api/v1beta1/azurecluster_default.go
index 27792ab7380..731932bab04 100644
--- a/api/v1beta1/azurecluster_default.go
+++ b/api/v1beta1/azurecluster_default.go
@@ -94,21 +94,27 @@ func (c *AzureCluster) setVnetDefaults() {
 	c.Spec.NetworkSpec.Vnet.VnetClassSpec.setDefaults()
 }
 
+// setSubnetDefaults ensures a fully populated, default subnet configuration
+// and in certain scenarios creates new, default subnet configurations.
 func (c *AzureCluster) setSubnetDefaults() {
 	clusterSubnet, err := c.Spec.NetworkSpec.GetSubnet(SubnetCluster)
 	clusterSubnetExists := err == nil
+	// If we already have a cluster subnet defined, ensure it has sensible defaults
+	// for all properties.
 	if clusterSubnetExists {
 		clusterSubnet.setClusterSubnetDefaults(c.ObjectMeta.Name)
 		c.Spec.NetworkSpec.UpdateSubnet(clusterSubnet, SubnetCluster)
 	}
 
 	if c.Spec.ControlPlaneEnabled {
-		/* if there is a cp subnet set defaults
-		   if no cp subnet and cluster subnet create a default cp subnet */
 		cpSubnet, errcp := c.Spec.NetworkSpec.GetSubnet(SubnetControlPlane)
+		// If we already have a control plane subnet defined, ensure it has sensible defaults
+		// for all properties.
 		if errcp == nil {
 			cpSubnet.setControlPlaneSubnetDefaults(c.ObjectMeta.Name)
 			c.Spec.NetworkSpec.UpdateSubnet(cpSubnet, SubnetControlPlane)
+			// If we don't have either a control plane subnet or a cluster subnet,
+			// create a new control plane subnet from scratch and populate with sensible defaults.
 		} else if !clusterSubnetExists {
 			cpSubnet = SubnetSpec{SubnetClassSpec: SubnetClassSpec{Role: SubnetControlPlane}}
 			cpSubnet.setControlPlaneSubnetDefaults(c.ObjectMeta.Name)
@@ -116,19 +122,28 @@ func (c *AzureCluster) setSubnetDefaults() {
 		}
 	}
 
-	var nodeSubnetFound bool
+	// anyNodeSubnetFound tracks whether or not we have one or more node subnets defined.
+	var anyNodeSubnetFound bool
+	// nodeSubnetCounter tracks all node subnets to aid automatic CIDR configuration.
 	var nodeSubnetCounter int
 	for i, subnet := range c.Spec.NetworkSpec.Subnets {
+		// Skip all non-node subnets
 		if subnet.Role != SubnetNode {
 			continue
 		}
 		nodeSubnetCounter++
-		nodeSubnetFound = true
+		anyNodeSubnetFound = true
+		// Set has sensible defaults for this existing node subnet.
 		subnet.setNodeSubnetDefaults(c.ObjectMeta.Name, nodeSubnetCounter)
+		// Because there can be multiple node subnets, we have to update any changes
+		// after applying defaults to the explicit item at the current index.
 		c.Spec.NetworkSpec.Subnets[i] = subnet
 	}
 
-	if !nodeSubnetFound && !clusterSubnetExists {
+	// We need at least one subnet for nodes.
+	// If no node subnets are defined, and there is no cluster subnet defined,
+	// create a default 10.1.0.0/16 node subnet.
+	if !anyNodeSubnetFound && !clusterSubnetExists {
 		nodeSubnet := SubnetSpec{
 			SubnetClassSpec: SubnetClassSpec{
 				Role:       SubnetNode,