When creating a new VM via the Azure Portal we only see Datacenter Edition, yet the docs seem to make it clear that Standard Edition is a valid option in Azure; although you have to create your own image for this.
It seems odd that given Standard Edition is supported, there isn't a default image for it. Is this just MS trying to encourage people to use the more expensive option by making that path the more convenient, or is there some technical reason why Standard Edition isn't available OOTB (e.g. whilst it can be used are there significant restrictions which would recommend against this)?
When researching this most posts lead to Hybrid Benefit, but my understanding is that this option's for where you have on-prem servers, allowing you to use the same license for an Azure VM and an on-prem device; or else allowing you to use licenses you'd previously purchased to avoid paying again for licenses in Azure. I'm not interested in that; but rather in new VMs created directly in Azure, where we only need the features offerred by Standard Edition, and don't want to pay more for functionality we're not using.
Before we create our own Windows Server 2022 Standard Edition image to avoid this extra cost I'm hoping to understand if there's further implications.
The only valid reason to use Standard over Datacenter is saving on licensing costs.
Which makes sense when you are actually buying the license to install the OS on your own hardware, but makes no sense at all on Azure, where licensing is either built-in or Hybrid Benefit.
You are going to save exactly nothing by running Standard instead of Datacenter in Azure; this is why they only offer Datacenter.
You can run Standard in Azure if you really want... you just don't have any reason to do it.
To clarify: there are two plausible reasons to run Windows Server Standard in Azure, but you are not interested in them. One is using Hybrid Benefit when you only have Standard licenses available, and the other one is when you are performing a lift & shift migration of an existing server to Azure, and that server happens to be a Standard one.