I was asked to prepare solution for sending user notification when he has been added or removed from specific Azure AD group. I am thinking of Azure Monitor service, and an alert creation, but I am not sure its appropriate service. I am not expecting whole solution, just only the direction, what azure service can I user in order to accomplish my task.
Your best bet is to use Microsoft Graph change notifications to monitor for group membership changes, and detect which ones you are interested in.
Alternatively, you could use Azure Monitor and alert on the appropriate Azure AD audit event.