Azure Web Sites enables you to build highly scalable web sites quickly on Azure. You can use the Azure Portal or the command-line tools to set up a web site with popular languages such as .NET, PHP, Node.js, and Python. Supported frameworks are already deployed and do not require more installation steps. The Azure Web Sites gallery contains many third-party applications, such as Drupal and WordPress as well as development frameworks such as Django and CakePHP. After creating a site, you can either migrate an existing web site or build a completely new web site. Web Sites eliminates the need to manage the physical hardware, and it also provides several scaling options. You can move from a shared multi-tenant model to a standard mode where dedicated machines service incoming traffic. Web Sites also enable you to integrate with other Azure services, such as SQL Database, Service Bus, and Storage. Using the Azure WebJobs SDK preview, you can add background processing. In summary, Azure Web Sites make it easier to focus on application development by supporting a wide range of languages, open source applications, and deployment methodologies (FTP, Git, Web Deploy, or TFS). If you don’t have specialized requirements that require Cloud Services or Virtual Machines, an Azure Web Site is most likely the best choice.
Cloud Services enable you to create highly-available, scalable web applications in a rich Platform as a Service (PaaS) environment. Unlike Web Sites, a cloud service is created first in a development environment, such as Visual Studio, before being deployed to Azure. Frameworks, such as PHP, require custom deployment steps or tasks that install the framework on role startup. The main advantage of Cloud Services is the ability to support more complex multitier architectures. A single cloud service could consist of a frontend web role and one or more worker roles. Each tier can be scaled independently. There is also an increased level of control over your web application infrastructure. For example, you can remote desktop onto the machines that are running the role instances. You can also script more advanced IIS and machine configuration changes that run at role startup, including tasks that require administrator control.
Virtual Machines enable you to run web applications on virtual machines in Azure. This capability is also known as Infrastructure as a Service (IaaS). Create new Windows Server or Linux machines through the portal, or upload an existing virtual machine image. Virtual Machines give you the most control over the operating system, configuration, and installed software and services. This is a good option for quickly migrating complex on-premises web applications to the cloud, because the machines can be moved as a whole. With Virtual Networks, you can also connect these virtual machines to on-premises corporate networks. As with Cloud Services, you have remote access to these machines and the ability to perform configuration changes at the administrative level. However, unlike Web Sites and Cloud Services, you must manage your virtual machine images and application architecture completely at the infrastructure level. One basic example is that you have to apply your own patches to the operating system.
See updated and comprehensive comparison from this link: http://azure.microsoft.com/en-us/documentation/articles/choose-web-site-cloud-service-vm/
