In install-config file, there is no zone/instance type setting under controlplane or defaultMachinePlatform
==========================
featureSet: CustomNoUpgrade
featureGates:
- ClusterAPIInstallAzure=true
compute:
- architecture: amd64
  hyperthreading: Enabled
  name: worker
  platform: {}
  replicas: 3
controlPlane:
  architecture: amd64
  hyperthreading: Enabled
  name: master
  platform: {}
  replicas: 3

create cluster, master instances should be created in multi zones, since default instance type 'Standard_D8s_v3' have availability zones. Actually, master instances are not created in any zone.
$ az vm list -g jima24a-f7hwg-rg -otable
Name                                        ResourceGroup     Location        Zones
------------------------------------------  ----------------  --------------  -------
jima24a-f7hwg-master-0                      jima24a-f7hwg-rg  southcentralus
jima24a-f7hwg-master-1                      jima24a-f7hwg-rg  southcentralus
jima24a-f7hwg-master-2                      jima24a-f7hwg-rg  southcentralus
jima24a-f7hwg-worker-southcentralus1-wxncv  jima24a-f7hwg-rg  southcentralus  1
jima24a-f7hwg-worker-southcentralus2-68nxv  jima24a-f7hwg-rg  southcentralus  2
jima24a-f7hwg-worker-southcentralus3-4vts4  jima24a-f7hwg-rg  southcentralus  3

4.17.0-0.nightly-2024-06-23-145410

Always

1. CAPI-based install on azure platform with default configuration
2. 
3.

master instances are created but not in any zone.

master instances should be created per zone based on selected instance type, keep the same behavior as terraform based install.

When setting zones under controlPlane in install-config, master instances can be created per zone.
install-config:
===========================
controlPlane:
  architecture: amd64
  hyperthreading: Enabled
  name: master
  platform:
    azure:
      zones: ["1","3"]

$ az vm list -g jima24b-p76w4-rg -otable
Name                                        ResourceGroup     Location        Zones
------------------------------------------  ----------------  --------------  -------
jima24b-p76w4-master-0                      jima24b-p76w4-rg  southcentralus  1
jima24b-p76w4-master-1                      jima24b-p76w4-rg  southcentralus  3
jima24b-p76w4-master-2                      jima24b-p76w4-rg  southcentralus  1
jima24b-p76w4-worker-southcentralus1-bbcx8  jima24b-p76w4-rg  southcentralus  1
jima24b-p76w4-worker-southcentralus2-nmgfd  jima24b-p76w4-rg  southcentralus  2
jima24b-p76w4-worker-southcentralus3-x2p7g  jima24b-p76w4-rg  southcentralus  3