I\'ve had a few outages of 10 to 15 minutes, because apparently Microsoft had a \'blip\' on their storages. They told me that it is because of a shared file system between t
Azure Web Apps do used a shared file storage. The best way to think about it is that all the instances of your app map to the same network share that have your files. So if you modify the files by any mean (e.g. FTP, msdeploy, git, ...), all the instances instantly get the new files (since there is only one set of files).
And to answer your final question, each instance does run on a separate VM.