A system-assigned managed identity is enabled directly on an Azure service instance. When the identity is enabled, Azure creates an identity for the instance in the Azure AD tenant that's trusted by the subscription of the instance. After the identity is created, the credentials are provisioned onto the instance. The lifecycle of a system-assigned identity is directly tied to the Azure service instance that it's enabled on. If the instance is deleted, Azure automatically cleans up the credentials and the identity in Azure AD.