It is the underlying VM (compute) that powers Web App, Function App and Logic App
On Scaling Out the Load Balancer is responsible for routing traffic between the VMs

Non-Isolated Plans

The Free and Shared Tiers use Infrastructure that is shared across multiple customers
Standard and Premium Plans are designed for production usage and supports autoscaling

Consumption Plan

A special plan that is used by serverless services (Function App, ACI)
It supports autoscaling but when used with Functions has a timeout of 5 mins

Isolated Plans

Isolated Service Plans run on Isolated VMs that are inside a VNet
Also called Isolation with App Service Environments (ASE)
Designed for High Scale, Memory Intensive Workloads
Apps can connect via VPN to on-prem resources

If configured for External Access then Virtual IP Address (VIP) is used to connect to ASE
If configured for only Internal Access then the IP Address of Internal Load Balancer is used