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To add to #1. The difference between VM's hosted in Azure and using Azure SQL Database is that they are completely different products. When you spin up a VM in Azure this is an Iaas (Infrastructure as a service) and is considered by Power BI to be on-prem and requires a personal gateway connector. When you use Azure Sql Database this is a Paas (Platform as a Service) and is considered by Power BI as a live connection and does not require any connector to be downloaded.
1. Yes, that is my understanding
2. Yes
3. Power BI Personal Gateway is what that article is referring to. There is another, that is the Analysis Services Connector for connecting to SQL Server Analysis Services. It is in the same place as the Power BI Personal Gateway, down arrow icon in upper right of service.