What are Azure Arc-enabled servers?

Azure Arc-enabled servers enables you to manage your Windows and Linux physical servers and virtual machines hosted outside of Azure, on your corporate network, or other cloud providers. This management experience is designed to be consistent with how you manage native Azure virtual machines. When a hybrid machine is connected to Azure, it becomes a connected machine and is treated as a resource in Azure. Each connected machine has a Resource ID enabling the machine to be included in a resource group. Now you can benefit from standard Azure constructs, such as Azure Policy and applying tags. Service providers managing a customer's on-premises infrastructure can manage their hybrid machines, just like they do today with native Azure resources, across multiple customer environments using Azure Lighthouse.

To deliver this experience with your hybrid machines, you need to install the Azure Connected Machine agent on each machine. This agent does not deliver any other functionality, and it doesn't replace the Azure Log Analytics agent. 

Azure Arc-enabled servers Overview - Azure Arc | Microsoft Docs