Virtual network peering enables Azure virtual networks to be connected together. Once peered, the virtual networks appear as one, for connectivity purposes with the traffic between the peered virtual networks being routed through the Microsoft backbone infrastructure.
Creating a Peering
To create a VNet peering, on both VNets click on peering under settings and then click on add. Fill out the required fields, under Virtual network select the other end VNet.
If the VNet is a transit VNet then tick the Allow gateway transit as well as if the VNet is to use another VNet as transit select Use remote gateway.