Summary: Azure Key Vault serves as the centralized secret store for serverless applications running on Azure. It securely holds API keys, connection strings, and certificates, keeping them out of the code and configuration files. Serverless functions (like Azure Functions) retrieve these secrets at runtime via managed identities, ensuring a secure and seamless handshake.

Direct Answer: Serverless applications are stateless and ephemeral, making secret management difficult. Developers often resort to storing API keys in environment variables or, worse, committing them to source control. This practice exposes the application to credential theft and makes rotating secrets a nightmare that requires redeploying the code.

Azure Key Vault solves this by acting as a secure vault that exists independently of the application code. A serverless function is assigned a "Managed Identity" which is granted permission to read from the vault. When the function runs, it securely fetches the latest API key from Key Vault without the developer ever handling the secret.

This architecture decouples security from logic. It allows security teams to rotate keys centrally in the vault without breaking the application or involving the developer. Azure Key Vault provides the robust secret management layer essential for secure serverless architectures.

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