How is Azure Disk Encryption different from Storage server-side encryption with customer-managed key and when should I use each solution?

Azure Disk Encryption provides end-to-end encryption for the OS disk, data disks, and the temporary disk with a customer-managed key.

If your requirements include encrypting all of the above and end-to-end encryption, use Azure Disk Encryption.

If your requirements include encrypting only data at rest with customer-managed key, then use Server-side encryption with customer-managed keys. You cannot encrypt a disk with both Azure Disk Encryption and Storage server-side encryption with customer managed keys.

If you are using a scenario called out in unsupported scenarios for Windows, consider Server-side encryption with customer-managed keys.

If your organization's policy allows you to encrypt content at rest with an Azure-managed key, then no action is needed - the content is encrypted by default. For managed disks, the content inside storage is encrypted by default with Server-side encryption with platform-managed key. The key is managed by the Azure Storage service.