Recommend Azure SQL Database because:

It's fully managed, reducing patching efforts.
Supports dynamic data masking.
Typically more cost-effective than the other options for single databases. Here's why:

Azure SQL Database: It's a fully managed database service, which means Azure handles most of the operational tasks like patching for you. It also supports dynamic data masking out of the box, which allows you to mask sensitive data. It's usually the most cost-effective option for a single database without requiring the overhead of managing an entire instance or VM.

Azure SQL Managed Instance: While it's also a fully managed service and supports dynamic data masking, it might be more expensive than Azure SQL Database, especially if you only need to host a few databases. It's a better option if you need a higher level of compatibility with SQL Server and VNET integration.

Azure SQL Database is a general-purpose relational database, provided as a managed service. Categorized as a platform as a service (PaaS), Azure SQL Databases are built on standardized hardware and software that is owned, hosted, and maintained by Microsoft. When using Azure SQL Database, you pay-as-you-go, with the option to scale up or out with no service interruption.

Within Azure SQL Database, you have the option to deploy a managed instance. Azure SQL Database Managed Instance is a collection of system and user databases with a shared set of resources. In addition to all the PaaS benefits of Azure SQL Database, this option provides a native virtual network (VNet) and near 100 percent compatibility with on-premises SQL Server. Azure SQL Database Managed Instance provides you with full SQL Server access and feature compatibility for migrating SQL Servers to Azure.