What is the difference between IaaS, PaaS and SaaS, and give Azure examples of each.

The three models differ in how much you manage versus how much the provider manages — this is the "shared responsibility" spectrum.

• IaaS (Infrastructure as a Service) — you get virtual machines, storage, and networking; you manage the operating system, patching, runtime, and application. Azure examples: Virtual Machines, Virtual Networks, Managed Disks. Maximum control, maximum operational burden. Use it for lift-and-shift migrations and workloads needing specific OS-level configuration.
• PaaS (Platform as a Service) — the provider manages the operating system and runtime; you deploy code and configuration. Azure examples: App Service, Azure SQL Database, Azure Functions, Container Apps. Far less to operate, at the cost of some flexibility. This is where most new development should start.
• SaaS (Software as a Service) — you consume a finished application. Azure and Microsoft examples: Microsoft 365, Dynamics 365. You manage only your data and users.

The interview point: the trade is control against operational cost. Patching an IaaS VM is your job and a real ongoing expense; with PaaS it is not.

Note: Serverless — Functions and Logic Apps — is worth naming as a further step, where you do not manage instances at all and pay per execution.