Azure Cloud Shell is a browser-based terminal that lets you run Azure CLI commands without setup. You start Cloud Shell, choose Bash or PowerShell, and get a ready environment. You can create resources like a resource group using commands such as 'az group create --name MyResourceGroup --location eastus'. After creation, you can list virtual machines in that group with 'az vm list --resource-group MyResourceGroup', which will show an empty list if no VMs exist. When finished, you type 'exit' or close the browser tab to end the session. This flow helps beginners see how commands run step-by-step and how the environment changes.