Our goal is to run UI tests with Appium on our CI build. But it seems that running the Android emulator (Hyper-V based) within virtual build machine (Windows Server 2016) on Azure might not be supported.
So my question is, does Hyper-V based nested virtualization is supported from a Windows Server 2016 virtual machine on Azure ?
note: using a CPU Android emulation is not an option
Yes, it is possible, you need to be on Dv3 or Ev3 SKU.
https://learn.microsoft.com/en-us/azure/virtual-machines/windows/nested-virtualization