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I agree YNN.
Y - WebApp1 has VNI and VNET1 and VNET2 are peered
N - NSG1 is associated to Subnet1, since Subnet1 contains VM1, WebApp1 is in a different subnet (WebApps must be deployed to an empty subnet). NSG1 as far as this question goes is only associated to Subnet1.
N - WebApp2 does not have VNET integration