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Tried to search through Azure docs and google for differences. Couldn't find any answers. To me, these services are mostly identical.

Could you explain the difference between Backup Vault and Recovery Services Vault?

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Backup Vault is what the name implies a place where backups are saved.

Recovery Services Vault provides functionality that is in addition to basic backup functionality, see: https://docs.microsoft.com/en-us/azure/backup/backup-azure-recovery-services-vault-overview