Answer is: B
I asked ChatGPT and here is the answer:
"To allow access to Vault1 only from VM1, you should do the following in the Networking settings of Vault1:
B. From the Private endpoint connections tab, create a private endpoint for VM1.
Creating a private endpoint for VM1 will enable private and secure communication between VM1 and Vault1. This approach ensures that only VM1, which has a private endpoint, can access the resources in Vault1. This is a more secure method than simply allowing an IP address or a virtual network because it leverages Azure Private Link to establish a secure connection.
Options A, C, and D do not provide the same level of security and access control as using a private endpoint. Option A allows access based on an IP address, which can be less secure. Option C adds the entire virtual network, potentially allowing more resources than just VM1 to access Vault1. Option D allows trusted Microsoft services to bypass the firewall, but it doesn't restrict access to VM1 specifically."