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I'm going to test something on the VM. If it fails, I want to recreate the VM using a snapshot. What I'm concerned about is if such a process won't change some property in azure.

For example, change the private IP address, then DNS Server wouldn't work. Are there any other things that might go bad in such a scenario?

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A VM Snapshot is only going to preserve the data on your disk, nothing external to the VM. Without know what you are trying to do, it is difficult to assess the risks.

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A snapshot is a temporary record of changes to the disk. it isn't a copy of a virtual machine in its own right, but merely allows you to take a step back in time to a version of the disk before the changes were made.

Recommend shutting the VM down and taking a copy of the disk. This should work fine in any scenario other than where some data is stored elsewhere (e.g. a database, Active Directory).

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