Explanation:

Box 1: Yes
You can specify DNS server IP addresses in the VNet settings. The setting is applied as the default DNS server(s) for all VMs in the VNet.
Box 2: No
You can set DNS servers per VM or cloud service to override the default network settings.
Box 3: Yes
You can set DNS servers per VM or cloud service to override the default network settings.
Reference:
https://docs.microsoft.com/en-us/azure/virtual-network/virtual-networks-faq#name-resolution-dns