Explanation

Box 1: Yes
Traffic from VM1 and VM2 can reach VM3 thanks to the routing table, and as IP forwarding is enabled on VM3, traffic from VM3 can reach VM1.
Box 2: No
VM3, which has IP forwarding, must be turned on, in order for traffic from VM2 to reach VM1.
Box 3: Yes
The traffic from VM1 will reach VM3, which thanks to IP forwarding, will send the traffic to VM2.
Reference:
https://docs.microsoft.com/en-us/azure/virtual-network/virtual-networks-udr-overview