If you want to configure your Azure Kubernetes Service (AKS) cluster with the Advanced Networking method (per https://docs.microsoft.com/en-us/azure/aks/configure-advanced-networking), you have to enter different IP address ranges. One of the address range is called “Kubernetes service address range”. And based on the description, the address range is used for Kubernetes Services.
However, it is important to know that this address range is actually only used for the Service type ClusterIP, and not for the type LoadBalancer. The internal Azure Load Balancer, which will be configured when specifying the type LoadBalancer and in case of private IP connectivity, still gets an IP address assigned from the virtual network/subnet that you selected. Btw, another recommended practise is to connect the internal load balancer into a dedicated subnet (not the one that you use for the Nodes and Pods), as described here https://docs.microsoft.com/en-us/azure/aks/internal-lb#specify-a-different-subnet.
Therefore, a network architecture could look like as follows:
Update: below, you can find reference to more detailed guides.