With the recent public CTP of Azure, there has been a lot of confusion (both internally and externally) about what each service is supposed to do.  Here’s my summary of some internal conversations along that line:

Name Description
SQL Data Services (SDS) An internet facing data service formerly known as “SQL Server Data Services” or SSDS.  SDS will be a rich relational data service offering DaaS (database as a service) to web and enterprise developers.
ADO.Net Data Services (Astoria) A framework that is used to publish an EDM (entity data model view) to the web using RESTful web services protocols.   SDS will support this for data access across the web.
Windows Azure Storage A scalable storage system providing basic block and tabular storage, and simple query.  
Windows Azure Compute A hosting service for running managed code (and eventually VMs) in the Cloud fabric.  
Azure The marketing brand for Windows Azure, .Net Services, Live Services and SQL Services

The other key question that I see constantly is “What is the difference between SDS and Azure Storage?  They both store blobs…”.

The truthful answer to that is there is not much functional difference between them right now.  The key is to look down the road.  SDS’ stated goal is to add more and more database-type functionality.  This means that you will start seeing SQL Server-type functionality added over time.  In theory, you will eventually be able to just use SDS for your database instead of an instance of SQL Server.  Obviously, that is waaaaaaay down the road, but you have to start somewhere!

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