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Difference between Azure SQL Server VM and regular Azure VM

When we create azure SQL on VM resource it seems that we are getting VM with full control and this resource is displayed both under VM and SQL services, but there has to be some difference between these two.

VM on SQL is intended for running of SQL server, but technically if we are getting VM then we should be able to install whatever we want on that VM? If this is the case, then we could turn this VM to be multi functional and make it to be the same as provisioning regular VM and installing SQL server manually.

If this is not the case and we are not getting full control, then it seems that this shouldn't be categorized as IaaS and shouldn't be marketed that way.

One obvious difference is in deployment models, with SQL on VM we are getting pre-installed SQL server with additional features like automated backups, etc.

Probably there is some difference in pricing models, but other then this I couldn't find any mentions about these two services.

SQL Server on Azure Virtual Machines provides full versions of SQL Server and simplify licensing costs when you pay as you go .

You are correct, SQL Server on Azure Virtual Machines provides additional benefits like Automated updates, Automated backups.

https://docs.microsoft.com/en-us/azure/azure-sql/virtual-machines/windows/sql-server-on-azure-vm-iaas-what-is-overview

When using SQL Server on Azure Virtual Machines you pay the per-minute licensing rate of SQL Server. The SQL Server license fee is included in the virtual machine image price.

https://azure.microsoft.com/en-us/resources/knowledge-center/how-do-i-license-sql-server-in-azure-virtual/

Microsoft Azure sends invoice with SQL License fee each month.

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