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Instructions via GUI:








Instructions via PowerShell:

$sp = New-AzADServicePrincipal -DisplayName "it-infra-arc-sp2" -Role "Azure Connected Machine Onboarding"
$sp

$sp = New-AzADServicePrincipal -DisplayName "it-infra-arc-sp2" -Role "Azure Connected Machine Onboarding" -StartDate (Get-Date) -EndDate ((Get-Date).AddMonths(1))
$sp.PasswordCredentials.SecretText


References:
Connect hybrid machines to Azure at scale - Azure Arc
In this article, you learn how to connect machines to Azure using Azure Arc-enabled servers using a service principal.
