Hi Shawn,
For creating SDE Schema based Enterprise Geodatabase in Azure SQL database use following steps. These steps are given for Microsoft Azure SQL Database Managed Instance.
1. Connect Azure SQL Server Instance thorough Microsoft SQL Server Management Studio (SSMS).
2. Create SDE Login at Instance Level
CREATE LOGIN sde WITH PASSWORD = 'xxx’
3. Create SDE user on master database
CREATE USER sde FROM LOGIN sde
4. Add login to the loginmanager role
ALTER ROLE loginmanager ADD MEMBER sde;
5. Create a database in Azure SQL Server
6. Create a user SDE on newly SQL Server database.
CREATE USER sde FROM LOGIN sde
7. Open ArcCatalog and click Create Enterprise Geodatabase tool to create enterprise Geodatabase.
8. Upon successful completion of enterprise geodatabase tool, Create a connection to Azure SQL database through SDE user.
Details steps are given in attached document.