D365 Finance and operations Cloud offering

Every cloud implementation of D365 Finance and operations offers three types of environments.

Tier-1 environment: Tier 1 environments include Develop and test boxes. As a standard MS provides one develop/test instance for the duration of the subscription. This instance is a non-production single-box instance and can be used for Development OR Unit testing OR an automated build environments. Customer can purchase additional develop/test instances separately as an optional add-on. Provisioning for Tier-1 occurs When the Design phase starts. The provisioning process requires that Microsoft Azure DevOps be configured.

Tier-2 environment: Tier 2 environments includes a Standard Acceptance Testing (SAT) Or User acceptance testing (UAT). As subscription plan One Standard Acceptance Testing (UAT) instance is provided for the duration of the subscription. This instance is a non-production multi-box instance which  can be use for UAT, integration testing, and training. Customer can purchase additional sandbox/staging instances separately as an optional add-on. Provisioning for Tier-2 occurs During on-boarding with the Microsoft FastTrack team.

Production environment– One production instance is provided per tenant. The production multi-box instance includes disaster recovery and high availability. It will be provisioned when the implementation approaches the operate phase, after the required activities in the LCS methodology and a successful go-live assessment are completed. There is no option to buy another environment this category. Provisioning for production environments occurs at the time of production system readiness phase. A production deployment request must be submitted in LCS. Deployment is done through the Dynamics Service Engineering (DSE) team within two business days.

Additionally, the following file storage and database storage are included:

File storage - Every customer receives 100 GB of file/Azure blob cloud storage for files and binary data. Additional file/blob storage can be purchased.

Database storage - Every Finance and Operations apps subscription includes 10 GB of Azure SQL Database storage per customer at no additional charge. Additional storage capacity is provided at no charge as an organization increases the number of user and device service licenses.

Difference between Tier-1 vs. Tier-2 and higher

Tier-1	Tier-2 and higher
Single-box environment	Multi-box environment
All components are installed on the same server, a Virtual Machine. These components include Application Object Server (AOS), the database, Dynamics 365 Retail, and Management Reporter. These components include Application Object Server (AOS), the database, Dynamics 365 Retail, and Management Reporter.	Components are installed on multiple cloud services, and typically include more than one Application Object Server (AOS).
Microsoft SQL Server is used.	Azure SQL Database is used.
The architecture differs from the architecture of the production environment to maximize efficiency and cost of the development team.	The architecture is the same as the architecture of the production environment, even though this type of environment has a different sizing and isn't enabled for disaster recovery.
The environment can be deployed in various ways. For example, it can be deployed as an add-on, it can be cloud-hosted, or it can be deployed as an environment image (VHD).	The environment can be deployed only as a standard environment or an add-on environment. It can't be cloud-hosted.
The environment isn't suitable for UAT or performance testing.	The environment is suitable for UAT and performance testing.

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PS: This post refers to Microsoft Doc website.