When you work with the azure window in an emulated environment (local development), you can use the desktop version of SQL Server 2012. But in the end, you should store your data schema in Azure SQL Database when publishing a cloud-based production application.
What is Azure SQL SQL Database?
Microsoft Windows Azure SQL Database is a cloud-based relational database service that is built on SQL Server technologies and runs in Microsoft Data Centers on equipment owned, hosted and maintained by Microsoft.
Similarities and differences
Like the instance of SQL Server in your place, SQL Azure SQL Database provides a tabular data stream interface (TDS) for accessing a Transact-SQL database.
This allows your database applications to use SQL Azure SQL Database in the same way that they use SQL Server.
Because Windows Azure SQL Database is a service, administration in the Azure SQL Database is slightly different.
Unlike administration for a local instance of SQL Server, SQL Azure SQL Database abstracts logical administration from physical administration; you continue to administer databases, logins, users, and roles, but Microsoft administers physical hardware such as hard drives, servers, and storage.
This approach helps the Windows Azure SQL database provide a large-scale multi-tenant database service that offers enterprise-class availability, scalability, security, and self-healing.
Because Microsoft handles all physical administration, there are some differences between the Windows Azure SQL Database and the internal instance of SQL Server in terms of administration, preparation, Transact-SQL support, programming model, and features.
Features and types
The Windows Azure SQL Database does not support all the features and data types found in SQL Server.
Analysis Services, Replication, and Service Broker are not currently available as services on the Windows Azure platform.
Because Windows Azure SQL Database does physical administration, any operators and parameters that attempt to directly manipulate physical resources will be blocked, such as Resource Governor, filegroup links, and some DDL statements of the physical server.
It is also not possible to set the server parameters and SQL trace flags or use the SQL Server Profiler utilities or database configuration utilities.
Windows Azure SQL Database supports many SQL Server 2008 data types; it does not support data types that are deprecated from SQL Server 2008.
For more details, you can follow the links below.
Azure SQL Database Overview
Support for tools and utilities (Windows Azure SQL Database)
Guidelines and Limitations (Windows Azure SQL Database)
Deploying an ASP.NET Web Application for Windows Azure Cloud Service and SQL Database
Hope this helps you.