What is Azure Service Principal?

Here your go: Use portal to create an Azure Active Directory application and service principal that can access resources.

When you have an application that needs to access or modify resources, you must set up an Azure Active Directory (AD) application and assign the required permissions to it. This approach is preferable to running the app under your own credentials because:

• You can assign permissions to the app identity that are different than your own permissions. Typically, these permissions are restricted to exactly what the app needs to do.
• You do not have to change the app's credentials if your responsibilities change.
• You can use a certificate to automate authentication when executing an unattended script.

Service principal just work as an impersonation for user in Azure AD. Refer - https://sanganakauthority.blogspot.com/2019/04/how-to-create-service-principal-or-app.html

Using this you can perform any type of management task against Azure using REST APIs. This way you avoid need of providing credentials in pop up and hence help to automate things in Azure using REST APIs.

Please refer to this official document.

An Azure service principal is a security identity used by user-created apps, services, and automation tools to access specific Azure resources. Think of it as a 'user identity' (login and password or certificate) with a specific role, and tightly controlled permissions to access your resources. It only needs to be able to do specific things, unlike a general user identity. It improves security if you only grant it the minimum permissions level needed to perform its management tasks.

If you want to create a new service principal(sp) with Azure CLi 2.0. You could login with your Azure AD user. Then execute following command.

az ad sp create-for-rbac --name {appId} --password "{strong password}"

The result like below:

{
  "appId": "a487e0c1-82af-47d9-9a0b-af184eb87646d",
  "displayName": "MyDemoWebApp",
  "name": "http://MyDemoWebApp",
  "password": {strong password},
  "tenant": "XXXXXXXX-XXXX-XXXX-XXXX-XXXXXXXXXXXX"
}

appId is your login user, password is login password.

After the sp is created, you also need give it Contributor role, then you could manage your Azure resource.

az role assignment create --assignee <objectID> --role Contributor

Now, you could login in non interctive mode with following command.

az login --service-principal -u <appid> --password {password-or-path-to-cert} --tenant {tenant}