Managed Identities are an identity and access management feature of Microsoft's Azure cloud offering that assigns identities to machines. This comes in two flavors: System-assigned identities, which are tied to the lifecycle of a resource and automatically deleted when the resource is deleted, and user-assigned identities, which can be scoped to a subscription or group of resources and require manual management to avoid identity sprawl. HashiCorp Terraform and Packer fully support Managed Identities as an authentication method, allowing users to securely authenticate with Azure without having to configure sensitive credentials in their code. This eliminates the need for secure secret introduction and makes it easier to manage access to cloud resources. With Managed Identities, users can provision identities and authenticate with Azure using a Terraform resource or Packer image build, streamlining their workflow and reducing the risk of identity sprawl.