App Services in peered Azure vnet not working

Question

In my Azure subscription I have 2 peered VNETs. VNET1 has address space 10.16.0.0/16 and VNET2 has 10.250.21.0/24. I have chosen the space addresses so that they were completely different. Peering works given that a VM in VNET1 can ping a VM in VNET2.

However, from VNET 1 I can't access an App Service deployed in VNET2. I tried to access the App Service using the IP address and the private DNS name.

Network Security Groups in both VNETs seem to be fine. I'm able to change them so that basic network diagnostics work (for instance, ping).

Any suggestions please?

EDIT 1 + SOLUTION

I can say that it's solved. After peering the virtual networks, I had to "link the private DNS zones". I had a few issues with the address spaces, but nothing that a terraform destroy/apply couldn't solve.

Answer 1

I tried to reproduce the same in my environment and got the results like below:

I have created a vnet peering with two different space address like below:

Created a app service with premium p1v2 and added outbound traffic vnet integration and added a private endpoint like below:

Then, I created a vm and connect through bastion:

When I try to verify in command prompt using nslookup got result successfully like below: